Proposal includes layoffs, large-scale cuts and the creation of a citizen’s economic advisory commission.

The once predictable ebb and flow of the balance sheets has now receded beyond view.

Left in its place is a mud flat full of financial obstacles.

“We’re at an extremely low tide right now and you can see all the problems at the bottom of the bay,” City Administrator Mark Dombroski said. “We can fix them now or do nothing and let the tide roll back in until we lose sight of them.”

Determined not to “waste a good crisis” as one council member put it, administration officials produced a bold proposal for slashing city expenditures and providing more oversight and up-to-date information on the city’s financial matters.

The $2.3 million cost cutting correction package unveiled Wednesday included layoffs and wide-ranging cuts that effect almost all city departments and community organizations.

However, the city administration warned that cuts were still not enough to cover budgeted reserves, and that more cost-saving measures would be needed before the end of the year.

“We’re still far short of where I think we need to be to have a healthy organization,” Dombroski said. “Additional reductions are likely needed. This is the first step to right-size the organization.”

Before the meeting, the city announced the layoff of six employees, three in Planning and Community Development, two in Public Works and one in Information Technology.

It was the first deliberate labor reduction by the city, something administration officials have tried hard to avoid through furlough days and natural turnover.

Paul Miller, a union chief shop steward and a public works employee at the city, urged the council to reevaluate city payments to community agencies and interest groups. He also hoped that the next round of reductions could have more staff involvement.

“Please don’t leave out the staff in the next plan,” he said. “We can be part of solution in other ways, besides as layoffs.”

The reductions mean that the city will scale back significantly on some major projects, including legwork on a future senior center and a new police and court facility.

Dombroski said that cuts would also affect morale and said that the administration and council would have to work hard to keep employees content in the current atmosphere.

“We need to keep a motivated work force, we need to find how to reward our employees,” he said. “At some point this begins to impact the quality and overall morale.”

Last year, staff numbers were budgeted at 154 full-time employees. By March, the city will be down to 134 FTEs.

Layoffs and project delays are just the beginning of the reductions.

The Public Works department took the largest scale back, with over $750,000 in reductions, mostly attributed to layoffs and the loss of director Randy Witt earlier this month.

The planning department took a large hit as well and will reduce it’s public outreach for the upcoming shoreline code update and eliminate code-enforcement mediation and on-call inspections.

Community organizations are also being asked to skim an additional 15 percent of their city-supported expenditures. This would include organizations such as Health, Housing and Human Services, which was initially spared from a large funding reduction when the 2009 budget was approved. Reductions across all community service organization are expected to total about $170,000. The specifics will be announced next week.

One of the most innovative aspects of the package involved the creation of a citizen commission that would advise the city on the health of the local economy. The advisory group would be made up of professionals who have insight on some of the major revenue generators for the city such as development, real estate and sales tax.

In the short term the city will also have to make a $600,000 inter-fund loan and collect up to $500,000 in outstanding payments from other governments. Improvements on the financial reporting systems will also revert to a cash-flow based monthly system for easier interpretation by council members and the community.

In the long term, the city will have to look at increasing service fees, selling unused property, implementing a vehicle license tax and establishing a six-year target for reserves, Dombroski said.

At the end of the meeting the council voted to approve the city’s $2.3 million reduction recommendation, and called for a decision on further city cuts to be approved by the end of March.

“This is a painful thing to do as you know,” council member Chris Snow said of the cuts and layoffs. “Unfortunately it had to come to this and we do it with great regret.”