As the city of Bonney Lake prepares its 2011-12 biennial budget, the message seems to be that times are still bad, but not as bad as expected.

The city’s $12.9 million spending plan for 2011 will still require using more than $226,000 from the city’s fund balance, but there are no plans in the mayor’s proposed budget for any further furloughs for city employees, according to Mayor Neil Johnson and City Administrator Don Morrison.

Johnson described next year’s spending plan as a “steady as you go” budget.

“With the way the new economy is shaping up, it’s a budget that holds things in place,” Johnson said.

But the mayor was also quick to call his proposal a “positive budget.”

“It brings a lot of value to the citizens,” he said.

Though expenditures are set to outpace revenues in 2010, changes and savings made by the city are now projected to cut that gap to about $105,000, down from an estimated $585,000 when the council passed its mid-biennial adjustment.

According to Morrison, the city takes in $553,000 more in revenue than it spends each year, but the city’s debt service pushes the overall budget into the red.

Sales tax revenues are still down in the city from previous highs, though this year’s numbers are up from 2009 and the city is predicting an increase in 2011 as well, but Johnson said those increases are expected to come in the form of new businesses, not necessarily increases in sales.

“Our positive sales tax growth in 2011, I think, is going to come from new business,” Johnson said, adding that the top 10 sources of sales tax to the city were all down in 2010.

The 2011 budget contains no new taxes or rate increases (beyond the 1 percent property tax increase) and there are no plans for any furloughs for city staff, though three open positions, including the sergeant position that was left vacant last week with the resignation of Sgt. Ken McDonough, will not be filled.

“Basically it’s a status quo, maintain the operations budget,” Morrison said.

City employees agreed to take furloughs in 2010, but Johnson said he did not make them part of next year’s plan because of the damage to morale.

“Furloughs can actually do more damage,” he said. “The way to get there in 2011 is to not fill three vacant positions.”

Johnson said the council was clear at the August budget retreat that they wanted the mayor to use as little as the city’s fund balance as possible to shore up operations and would like to see the city living within its means.

“We needed to spend what we brought in,” he said.

To do so, Johnson said each department head was asked to “sharpen our pencils” and look closer at their proposed budgets and needs and were urged to “do more with less.”

Included in the 2011 spending plan, however, is a proposal to spend $2.6 million of the city’s fund balance on one-time spending capital improvement projects (see accompanying story on Page 1).

Councilmember Randy McKibbin said he was glad that things are looking better than when he first joined the council in January, but he was wary of the mayor’s spending proposals and said he probably wouldn’t vote for the budget as proposed, though he was pleased there was an effort to bring spending more in line with revenues.

“I like a zero, balanced budget,” he said, but added he was glad to see there were no furloughs proposed this year.

Deputy Mayor Dan Swatman also said he was, “pretty impressed with the administration’s proposal to reduce expenditures,” but said his preference was also for a zero-based budget as he too is not a fan of using reserves to cover costs.

But all in all, Swatman said he liked what he saw.

“It looks really good,” he said of the spending plan.

Unfortunately, the second half of the biennial budget is a different story. According to Morrison barring a “miraculous recovery” or “substantial annexation that creates new revenue,” layoffs will be necessary in 2012, though he anticipated those positions would be added back by 2014.

The biennial budget also does not factor in a potential annexation of the areas south of the city limits. Johnson said the budget does not assume the annexation would be successful and said if approved, the annexation areas would be factored into a mid-biennium amendment.