May 03, 2001 11:00 pm

By Ray Linker

Observer Staff Writer

In the present economic situation facing many Oregon cities, can

La Grande citizens expect fewer services at a higher cost?

That is a subject the citys budget committee begins to tackle Monday.

Because of rising personnel costs that the city can do little to control, and also because of tax limitations that have been imposed on Oregon governments in recent years,

La Grandes $6.24 million 2001-02 general fund budget will be tight, said City Manager Wes Hare.

High quality city services are at some risk in the years ahead because income is not keeping up with costs, Hare reports in his budget message.

Not to be ignored are dramatic increases in energy prices, the failed northside annexation, large capital projects and lower population numbers, Hare said.

Despite some major financial challenges in the next year, I am confident we can continue to provide needed services and improve facilities, the manager said.

He is asking the budget committee, which consists of the seven council members and a like number of La Grande citizens, to maintain existing service levels while developing new revenue sources and selectively reducing full-time positions.

Hare said the enterprise funds, which support the citys utilities, are generally healthy although revenues for street improvements are inadequate to meet expectations.

For the short term, Hare said, the city should try to maintain services and balance the budget by using funds set aside for capital expenditures as a means of preserving an acceptable cash reserve.

But that choice masks the imbalance between operational costs and revenue and is obviously not a sustainable practice, Hare said. General fund revenues must be increased and/or expenditures reduced through the course of this (coming) fiscal year.

But not to panic.

The city is not in crisis, the manager said. There is enough money coming in to sustain operations at current levels and still maintain close to $1 million in a reserve fund. And that does not include the $2.2 million set aside for construction of a new library and fire station.

However, the city will have to continue to use restraint in spending on materials and supplies, Hare said.

Personnel costs are another issue, he said. The city is negotiating with firefighters and must offer competitive wages or be forced into arbitration to do so, Hare said.

The most rapidly escalating personnel costs are in health insurance benefits, he said.

The budget committee meeting will begin at 6 p.m. Monday at City Hall and will meet at the same time on subsequent nights until approving the entire document.