Mayor Ray DeGraw on Wednesday presented Grandview City Council with a set of steps the city will have to take to ensure its positive cash balance can be extended through 2015.

Mayor Ray DeGraw on Wednesday presented Grandview City Council with a set of steps the city will have to take to ensure its positive cash balance can be extended through 2015.

He made his presentation during a meeting of council's finance committee, which was attended by the full council.

The 2.5-percent income tax levy council is considering should be placed on the May 4 ballot so its revenue can be collected beginning July 1, DeGraw said.

He proposed placing a 2.5-percent income tax on the ballot. The levy should have a 2 percent credit through 2013, then go to a 2.25 percent credit starting in 2014, he said.

DeGraw said projected expenditures for the years 2010 through 2016 are based on a number of assumptions, including the expectation that overall expenditures will increase 3 to 3.5 percent each year.

Other assumptions include setting aside $100,000 each year for unexpected expenses, the anticipation that police and fire pension charges will increase, expecting the cost of retirement payouts of accrued leave balances and a transfer of $250,000 capital expenditures each year from the general fund.

No additional personnel will be hired through 2016 beyond the positions funded in the current budget, DeGraw said.

Income is based on a 2.5 percent income tax with a 2.25 percent credit, he said.

"The conclusion is that we will be out of cash in 2013," without taking the immediate actions he was outlining, DeGraw said.

The administration will immediately reduce the current budget by $300,000, he said.

"By reducing the budget, we believe we can extend our positive cash balance through 2015 and possibly through 2016 if we're careful," DeGraw said.

The mayor said he will be sitting down with department heads to determine where budget cuts can be made.

Current or future vacancies will be filled, reassigned or reclassified based on the needs of the city to allow current service levels to be maintained, DeGraw said.

Some maintenance will continue to be deferred, he said.

"Revenue will continue to be monitored and expenditure adjustments will be made based on actual income," DeGraw said.

Other sources of income, such as increased user fees, may be needed to maintain current service levels if actual revenues do not meet expectations, he said.

"The real issue is the capital (improvements expenses)," DeGraw said.

Capital outlays make up 2.2 to 2.5 percent of the city's operating budget, he said.

If another source of revenue could be found and capital expenses were removed from the operating budget, the city would have a projected carryover of between $1-million and $1.5-million at the end of 2016, DeGraw said.

Council member Anthony Panzera said he believes the levy resolution council adopts for the May ballot should include language that states a certain portion he suggested 5 percent of the revenue generated by the levy be used for capital improvement projects.

Council is expected to hold first reading of a levy resolution at its meeting on Monday. Council will continue its discussion to determine the final details and language of the legislation before taking a vote on the measure before the Feb. 18 filing deadline for the May election