The Covington City Council took a look at the budget picture at the mid-year point and also took a glimpse into the future.

At the mid-point of 2010 the city is holding its own in the economic jungle with a projection of a being little ahead of the game by the end of the year.

City Manager Derek Matheson said while revenues for the city are down, “expenses are down more.”

The financial report presented to the council Aug. 10 by Finance Director Rob Hendrickson noted a drop in revenues for construction sales tax and by the closure of Bowen Scarff Ford in Covington.

The report also noted the REET fund — or real estate excise tax — is below forecast and impact fees on developments are down because of the economy.

The city laid off employees going into 2010 which helped bring expenditures down.

According to Matheson, a potential problem in the future is if one of the liquor initiatives pass in the general election closing state liquor stores and moving the sales to private businesses.

Matheson said the cost to the city could be about “$230,000 by 2012, depending which initiative passes.”

The two initiatives, 1100 and 1105, would both close state liquor stores and allow sales by private parties. Initiative 1100 is back by retailer like Costco and the other is backed by wholesalers.

Matheson said 28 percent of the excise tax and 40 percent of the liquor board profits “are disturbed to the cities on a per capita basis.”

The city manager stated the effects of the liquor funds would be begin in 2011 and the full effect hitting in 2012.

According to the financial forecast, if the economy continues to lag and one of the liquor initiatives becomes law, the city could be down by about $300,000 including debt service in 2011 and about $500,000 by 2012 if no action is taken to fill the gap.

The City Council and staff will begin considering a course to balance the books once budget deliberations begin later this year.