Budgets for cities, like individuals, come down to a couple of simple numbers, the amount coming in and the amount going out.

Tony McCarthy, the city of Maple Valley finance director, painted a stark mid-year budget picture for the Maple Valley City Council at the Monday study session. Not all the news was gloom and doom, but the addition and subtraction was sobering. The financial tea leaves told the council some very difficult decision are looming on the horizon.

City Manager David Johnston stated the realities of the budget when referring to a graph showing the city’s expenditures rising and revenues staying flat.

“I don’t like the right side of that graph,” Johnston said. “2011 is the first year we are looking at expenditures exceeding the revenue coming in.”

Johnston pointed to several contributing factors including the lack of commercial development, which the city hoped for earlier in the year. At the beginning of the year there was the belief Fred Meyer could be rolling in 2010 and Swedish might soon start construction of a 24-hour emergency medical department, but the economy has slowed or stalled both.

“A lot of things are forcing us at this moment, “ Johnston said. “We cannot continue to have a budget where expenditures exceeds revenue. We will have to have some frank discussions.”

One bright spot was the higher than expected number of permits for single family residences. As of the end of June, 64 permits were issued and 11 more added through July 11.

The 2010 budget predicted only 50 single family residence permits for the year.

Also on the happy side of the ledger, liquor excise, police revenue and parks and recreation charges were all above the projected budget.

The dark side of the ledger is revenues are expected to be down by about 8 percent. According to McCarthy’s report some of the drop will be offset because government expenditures are projected to be about 6 percent lower. The savings are coming in part from four vacant positions that are not being filled.

McCarthy went over a hit list of revenue losses and expenditures that rang up at $705,000, which will ripple into 2011.

The loss of commercial development came in at $170,000, electric and gas utility tax delays $90,000, telephone utility tax is down about $80,000, possibly from people cutting back on land lines.

Cancellations at the Lake Wilderness Lodge came in at $35,000.

The Lake Wilderness Golf Course is expected to cost the city about $130,000 in operating costs. The course is projected to make money, but the restaurant is losing.

The legal and transportation study costs associated with the two YarrowBay master planned developments, The Villages and Lawson Hills, in Black Diamond, are running at $200,000.

According to McCarthy, the city attorney’s 2010 budget was $40,000 for outside legal council and $50,000 for Donut Hole or Summit Place counsel and litigation. McCarthy said Morris and Taraday, the Seattle firm hired by the city to provide counsel on the YarrowBay developments in Black Diamond and Summit Place, will use most of the $90,000 budgeted plus an additional $70,000, which was approved by the City Council June 21.

McCarthy also stated in an e-mail there was an additional $14,000 spent for The Villages and Lawson Hills master planned development and FEIS hearing transcripts and $15,000 for legal assistance concerning the community facilities district legislation.

The Kirkland-based Fehr and Peers, transportation consultants, cost the transportation division of Public Works $90,000 for traffic analysis provided by Natarajan Janarthanan and another $15,000 for transportation cost estimating, according to the finance director.

The finance director listed strategies to help slow the bleeding this year including freezing vacant positions and reviewing health insurance savings. Also a citizens task force will be looking at the cost of operating the golf course and providing some recommendations.

In 2011 McCarthy noted the city would likely be looking at employee furloughs, reviewing the policy of moving 25 percent of the sales tax to capital programs and community grants. In the 2010 budget the city allocated $357,538 for the community grant program.

Mayor Noel Gerken said some expenditures by the city will be considered in the 2011 budget process “that have never been on the table before.” Gerken said he wanted to start the budget process earlier this year because of the challenging decisions facing the members.

“We were lucky enough to weather the storm over the last year and a half,” Johnston said. “We’ve been able to not have mass layoffs because we maximized the use of our resources. (But) the communities not affected over the last year and half are facing it now.”

The fund balance is predicted to be at about 19 percent of expenditures by the end of 2010 or $1.6 million, which is well above the city policy of maintaining a 10 percent fund balance above expenditures.

McCarthy noted Maple Valley has always had a healthy fund balance, which has allowed the city to deal with the recession up to now.