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HIGH POINT (MCT) — The city is facing an estimated $8 million budget deficit through the next two years, as the recession has brought about lower-than-expected revenues.

City Manager Strib Boynton told City Council members Tuesday the city can get through the current fiscal year through belt-tightening, but tough decisions about spending priorities, service levels and new ways to raise revenue are looming.

"The great recession has caught us. We are weathering it. We're not in a financial crisis like some communities are," Boynton said. "Something has to give on the revenue side, or we will be making choices on what existing services will be reduced or eliminated in the next couple of years."

A $3 million shortfall is projected for the current $320.4 million budget, and officials forecast a $5 million shortfall through 2010-11. In addition to sales tax, other funding sources —such as beer/wine and franchise revenues, along with current or planned private construction activity — have dried up. At the same time, the city faces increases in employer retirement contribution rates and health insurance costs that should total about $2.2 million.

About $2.5 million in shared revenues with Guilford County and the state could be at risk, and the city could be forced to take over state road maintenance responsibility at a cost of about $1 million per year.

Boynton said no one has suggested a property tax increase. Each penny on the tax rate will raise about $900,000. Another possible way to raise revenue is to institute a $5 or $10 monthly garbage collection fee that would raise $2.1 million to $4.2 million. Although not recommended, transferring money from the electric or water and sewer funds to the general fund is another option.

To date, the city has trimmed personnel costs by $1.935 million by salary and hiring freezes — including police, fire and 911 dispatchers — and possibly deleting a significant number of vacant positions in the 2010-11 budget in addition to the 23 vacant jobs eliminated in the current budget. City department heads have reduced operating expenses by $993,700. Non-essential travel and related expenses have been cut and city officials are early in the process of evaluating possible changes in existing service levels, including reducing hours in the library and recreation centers, cutting back on grass mowing and going to every-other-week recycling pickups.

Council members will likely hold additional budget discussions in the coming weeks, and the city at some point will afford the public opportunities to weigh in on budget debates.