Balancing the city of Lampasas' 2009-10 budget may require delays in some capital projects, a change in health insurance plans and a reduction in police staff.

The Lampasas City Council met in workshop sessions last week and is reconvening today at 1 p.m. to develop a proposal for the budget year to begin Oct. 1.

As he typically does during budget preparations, City Manager Michael Stoldt developed an initial budget that included all department heads' requests. He then made three sets of suggested cuts before presenting the City Council a preliminary budget.

Stoldt said the upcoming budget will be more difficult to balance than in most years. The 2009-10 budget began with about a $3.11 million deficit.

"That was further in the hole than I've ever been," said the city manager, noting that the initial deficit typically is $1 million to $2 million.

While the City Council approved a reserve transfer of $1 million for fiscal year 2008-09, the city is projected to spend less than $700,000 of those funds. The suggested water and wastewater reserve transfer for the upcoming budget year is $363,000. Although Lampasas in the upcoming year is projected to have $406,000 in reserves beyond 90-day emergency operating expenses, Stoldt urged the City Council to reduce the use of reserves so the city can "live within our means."

To manage expenses, the council will delay several large capital projects, including the final phase of a South Feeder intended to build into the city's electric system both emergency backup and the capacity to serve a growing population. The last segment of the feeder, to run from U.S. Highway 183 to Old Georgetown Road, will be included in a debt issuance in two years, Stoldt said.

The City Council still is discussing a possible sewer extension to serve St. Mary's Catholic Church and potential future growth on North Key Avenue and Farm-to-Market Road 580 East. The extension is estimated to cost about $235,000.

A Lampasas Fire Department substation will be delayed. Although the city owns two properties where an additional fire station could be built, Lampasas does not have the funds to hire the seven firefighters who would be needed to man the building, Stoldt said.

As a result, the city manager also recommended eliminating one police position through attrition, as he said the city's needs for parks and fire employees are greater than for police. Stoldt recommended not hiring a replacement if a police officer retires in the next budget year, which he said could save $50,000.

Despite those cuts, construction is set to begin soon on a sports park near FM 580 West, as the City Council awarded a bid at a recent meeting. At today's budget hearing, council members may discuss whether to light at least some of the four athletic fields being built at the facility. Lighting for two of the playing areas would cost $187,000, Stoldt said.

At press time, the City Council had not discussed whether to begin building a civic center at Campbell Park -- a project that could cost $1.2 million in its first phase. Lampasas has about $1.2 million in hotel/ motel tax revenue designated for a civic center, and city officials plan to borrow another $400,000, Stoldt said.

In addition, the city's Scott & White health insurance plan is increasing in cost by nearly 20 percent. As a result, the City Council is considering a preferred provider plan that would increase costs by 6.2 percent.

Under that plan, workers would pay a deductible plus 20 percent of their health-care expenses. Employees who wish to keep their current level of benefits, however, would have the option of paying the difference between the current no-deductible insurance package and the 80/20 plan.

The preliminary budget includes 3 percent raises, intended as cost-of-living adjustments, for all city employees.

The budget also may incorporate:

• a slight electric rate decrease, which should make utility purchases less expensive both for the city and for utility customers.

• a 25-cent increase in swimming pool admission fees.

• a 25-cent hike in the base water fee for utility customers and a usage fee increase of 15 cents per thousand gallons consumed. The higher water charges will help offset a "fairly large" increase in operating costs paid by the city, Stoldt said.

• $50,000 toward the construction of public restrooms in the addition to the Lampasas County Office Building. Lampasas County will pay for the remainder of the bathroom project, estimated to cost $88,000.