The City of Powell is projecting an operating deficit in its budget for the second straight year.

Powell’s proposed 2010 annual budget shows the city spending $583,091 more than it is taking in, which is 16 percent less than the shortfall proposed for this year’s budget. Debra Miller, city finance director, said she is optimistic Powell can whittle the deficit down next year like the city has done this year.

The city’s proposed 2009 budget reflected an operating deficit of nearly $700,000. Even though Powell decreased its revenue projections roughly by $368,000 in September, the city is predicting its operating deficit will be hundreds of thousands less than it anticipated for the year — estimated at $213,152 currently.

“Hopefully by the end of the year that number will squeeze a little lower,” Miller said.

City officials will present the 2010 budget proposal to Powell City Council Nov. 17 for a first reading. Miller said she has spent “several hundred hours” crafting the budget.

“It was a little harder (creating the budget this year) because we knew the revenues were down. We were trying to find any little bit of cushion to take out for possible savings,” Miller said.

Every city department works to identify cost savings areas through out the year, according to Miller. The proposed 2010 budget identifies $150,500 worth of cuts to various departments “that will allow the city to continue to provide the same level of services.”

The new budget also paints a rosier picture for Powell’s financial future. For example, the city is projecting a roughly $588,000 operating deficit for 2011 instead of $1.1 million as it predicted in the budget a year ago. By 2013, the city is now projecting its revenues will draw very close to expenditures.

Part of this is due to improving economic conditions, according to Miller.

“We think the recession has hit the bottom and we are going to be creeping up very slowly,” Miller said.

The city, however, has yet to decide how and when it will generate additional revenue for needed capital improvement projects. In 2007, city council approved a capital improvement plan that identified $4,750,000 in projects to be completed from 2008 to 2010, but due to lack of funds, Powell has yet to pursue these projects.

Powell’s proposed 2010 budget includes one capital improvement project: $200,000 for engineering the Murphy Parkway Connection.

A capital improvements committee consisting of residents is currently working with Powell officials to determine what the city can do to fund its construction projects.

For years the city’s finance committee has looked into the issue and in July the members announced increasing Powell’s income tax was the best solution.

Powell’s income tax rate has remained unchanged for more than 15 years, according to Steve Lutz, city manager. The city has the lowest income tax rate in Central Ohio.

Currently, those who live and work in Powell pay a 0.75 percent income tax while those who live in the city but work elsewhere — which is the case for roughly two-thirds of Powell residents according to city officials — pay their respective community’s income tax and Powell receives a 0.25 percent credit of that amount.

Under the plan outlined by the city previously, the income tax rate would eventually increase to 2 percent — as it is in most Columbus-area communities — and the credit on commuter income would increase to 1.5 percent; that effectively means two-thirds of Powell residents would not pay additional taxes, but the city would receive significantly more revenue.

Voters in Columbus, where many Powell residents work, approved increasing the city’s income tax rate to 2.5 percent in August.

bbullock@delgazette.com