Over the next five City Council meetings, culminating in a final vote on Dec. 3, the Mercer Island City Council will deliberate on how to fashion a $25 million balanced city budget for the next two years.

Under Washington state law and standard city practice, the city manager is to deliver a balanced budget to the City Council every two years.

As in recent years, the real work will be in finding ways to cut expenses in light of declining tax and fee revenues.

Preliminary figures indicate that without those cuts, the city will be short by more than $1 million each year.

The 2012-2013 budget message, prepared by City Finance Director Chip Corder, states that “much of the focus will be on revenue and expenditure trends and on how the projected 2012-2014 budget deficits were bridged.”

In other words, the city’s financial staff had to look at ways to keep service levels high by finding ways to make cuts and shift funds to make up for deficits.

“The proposed budget relies on a mix of non-service reduction, small reductions in selected discretionary services, continued constrains on staff salary increases as well as (implementing) the optional one percent property tax increase.”

Across the board, tax and other sources of city revenue have declined. Those sources include sales tax revenues.

The council’s goal is to see where changes can be made to keep costs down while keeping service standards high.

Service reductions will be vetted by weighing six factors:

• Slow spending where possible on general fund services supported by taxes.

• Avoid services reductions that come from fee revenue or grants already in place.

• Apply the adopted priorities of government to prioritize cuts or spending.

• Determine whether a service is mandatory, essential or discretionary.

• Look at the biennial citizen survey to get further input on how a particular service is viewed.

• Demonstrate savings before adding any further need for tax revenue increases.

Key items that will influence the budget outcome are employees’ wages and benefits that now represent one of the largest pieces of the city budget. To that end, city staff and the Council had come up with alternatives to control employee benefit costs as well as limiting staff.

The city plans to make or add the equivalent of four new FTE employees. Some of those are already part-time or contract employees. At the same time, the analysis calls for reducing the number of FTE by the equivalent of more than 10 employees.

Changes are also proposed for Youth and Family Services, the level of services at some parks and public spaces, and public programs such as the fireworks and art programs similar to the last budget cycle.

New revenue could come from implementing the city’s discretionary ability to implement a 1 percent tax on residents and/or increasing rates charged for utilities such as water, sewer, stormwater and emergency medical services (EMS).

At present, the combined utility rates paid by Islanders are significantly less than the average paid for by all King County jurisdictions.