City Manager Mark Dombroski has released initial revenue trends for the city.

And the results aren’t good.

“Trends for both major and recurring revenues are almost perfectly flat,” said Dombroski, who left the city Friday for a job in Washington, D.C. “Over time, your revenues aren’t increasing at all, but you have increasing labor costs.”

Figures provided to the City Council by Dombroski showed that Bainbridge is the poorest city in the county in terms of sales tax revenue per capita and among the poorest in property tax per square mile.

Since 2004, total recurring revenue has fluctuated between $16.9 million (2004) and $20.3 million (2007), which averages out to approximately $18.6 million.

The council must create more cash reserves to deal with everything from day-to-day expenses to emergency scenarios, Dombroski said.

“Until the city can re-establish its reserves, it runs the risk of not having the ability to fund operations in the short-term,” Dombroski said Thursday in an e-mail.

Dombroski said a large chunk of revenue, property taxes, only comes in twice a year, which can cause problems for the city.

“This happened in January, and the city was forced to borrow from the water fund to keep general government cash positive until property tax was received in April,” Dombroski wrote in the email. “That loan was repaid in May.”

On the utility side, the city authorized an interfund loan of $3 million earlier this year to be taken as needed from the water fund to prop up the sewer fund.

Dombroski said for the city to create more cash reserves it has to function somewhere under the revenue threshold, but it will be difficult for the city to operate while spending much less than that amount.

The council now faces the difficult task of figuring out how to either pare down expenses to match tax-supported revenue or cut costs.

Dombroski said the city is already operating at nearly minimal cost.

“I know people say cut, cut, cut, but you’re going to get to the point where you can’t sustain this anymore,” he said. “If you were a business you’d close your doors.”

Currently, Dombroski said, Bainbridge has the least coverage per capita of police in the county; long-range planning, which is responsible for 53 miles of shoreline, only has two planners and finance is down to two or three accountants.

The council agreed that continuing to simply cut costs wasn’t the long-term solution to the city’s financial woes.

Councilor Debbie Vancil said it may be time for the city to start looking into sharing services and facilities with other governments.

“There are new things we can do,” she said. “We can’t continue to cut the city until it barely exists.”

Dombroski said sharing resources may be effective, but it works only on a case-by-case basis. He cited the fact that Bainbridge contracts to paint the road strips each year. The county does that work for most of the municipalities, something that Bainbridge may want to take advantage of if it’s cheaper. But, given the impact of the economic crunch, neighboring governments are suffering to fulfill services as well.

“With the downturn in the economy, many governments are reducing staffing and resources below requirements – sharing can become difficult when you don’t have enough for yourself,” he wrote. “But, it is a great idea that all in the county should explore and implement if possible.”

Dombroski added that a number of short-term fixes, like lowering the B&O tax, assessing more taxes on utlities, charging a $20-percar fee and asking for voter bonds on issues, rather than depending on recurring revenue, could help the city get its financial situation under control. “But how politically viable they are is the question,” he said.

The councilors concluded that the city needs to identify what its essential services are and stick to those.

Councilor Bill Knobloch advocated a simplified approach, where the city focuses on its basic services, in lieu of lofty capital projects, as the direction this government needs to head in such a financially tight time.

The highest profile capital projects, Winslow Way reconstruction and the Waste Water Treatment Plant upgrade, are funded out of utility money and wouldn’t save the city anything in tax-supported funds if they were slowed or stopped.

Dombroski said the city is in its current position on the general fund side because of decisions made by the citizens on the image of the island.

“Poulsbo decided they were going to be the home of Wal-Mart and The Home Depot; they made that decision, and they’re benefitting from that sales tax… We decided we want the rural feel and now we have to pay for that,” Dombroski said. “People who live here and want to maintain this lifestyle have to vote on themselves.”