The Demopolis city council will meet tomorrow to face down the largest financial hurdle of this fiscal year – passing the budget.

Last month the council agreed to table the budget pending further review of how to balance a ledger that called for an operating loss of $100,000, which included a $1.4 million infusion from the city’s reserves.

Until the council passes a budget for this fiscal year, which began Saturday, city departments will operate under the guidelines of the 2010-2011 budget.

“As of now, I think there are some line items we can look at,” said councilman Bill Meador of possible reductions. “It doesn’t get us all of what we need, but saving pennies leads to saving dollars.”

Meador contended that the city could ill afford to proceed on a $7 million-plus bond issue that encompassed the purchase of land for construction of a port, infrastructure improvements and an aggressive road paving and water project. If the bond is carried out to the maximum amount, he said the city will spend in excess of $400,000 in interest payments alone.

“We need to look at the excess that we’re tying to spend with the bond issue,” Meador said, “and there are alternate ways to get this done that don’t cost us $2.5 million. We can reduce the second part of the bond issue.”

Meador said any projects or line items eliminated to balance the budget could be added back should the city find itself with an unexpected flow of cash.

“If we’ve underestimated ad valorem taxes, sales tax, gasoline tax…then yeah, we can look at adding them back,” he said.

Councilman Jack Cooley, who is a member of the finance committee that passed the original budget, said he had no plans to present any changes but would gladly hear what suggestions his counterparts have to offer Thursday night.

“I really don’t have any plans to change what the finance committee proposed because finance committee was unanimous in what they proposed,” he said.

Councilman Thomas Moore, who also was part of the trio that proposed the original budget agreed.

“Over the last two or three years, we’ve been cutting it close and this year, this budget, materially is no different,” Moore said.

Further, Moore questioned the questioned the city’s projected $400,000 loss that was expected to be posted last fiscal year.

“There are some items that were posted to the budget as an expense that I’m certain are not supposed to be there,” he said, adding that he was still investigating the items but expected to be prepared to present them to the council Thursday. “I feel like (the loss) is somewhere between $75,000 to $100,000.”

Councilman Mitchell Congress said the budget lacked detail and that he was uncomfortable voting on it as presented until that can be resolved.

“I want to know how (the finance committee) arrived at the figures they’re presenting to us,” he said. “I want to see what the requests were from the department heads and where that money is going.”

Congress said he was prepared to not vote on the budget until he gets the detail he seeks.

“I’m just not comfortable voting for it as it is right now,” he said.

Councilman Melvin Yelverton shared Congress’s concern with the budget but said he didn’t see continuing to table the matter an ideal resolution either.

“I’m not happy with it but it is something that we’ve got to pass,” he said. “I would really like to improve it, but I really don’t know that we can.”

Demopolis mayor Mike Grayson said he would suggest the infrastructure improvements currently budgeted be removed, which would get the city close to a balanced budget.

“I will suggest we continue with port project, but hold off on infrastructure, the non-revenue and non jobs creating projects,” he said. “That will save us about $145,000 year.”

Grayson further noted that those savings would bring the city to within $100,000 of having balanced budget.

“There’s the issue of the $91,000 one-time pay adjustment,” he noted. “I’m willing to bite the bullet on that one, since it’s for the employees.”

The proposed budget includes a $1,000 one-time bonus for each full-time city employee en lieu of a pay raise. The city took similar action last year.

In the meantime, Grayson said city department heads are expected to hold close to their expense allocations and that there will be repercussions for those who go astray.

“We’ve made it very clear that this is serious,” he said of following the budget. “All purchases must be approved. It used to be that only purchases of $100 or more had to be approved. Now, it’s everything.”

Grayson also said his office and the council have impressed upon city managers that any deviations will not be tolerated.

“All department heads have been instructed to live within their means,” he said. “If any department runs over, personnel cuts will be addressed to get that department back under.”

The council will meet at 5:15 p.m. Thursday at Rooster Hall.