The Russell Springs City Council heard Mayor Hollis DeHart's assessment of the city's financial standing at its January meeting.

"We cannot afford to wait until the wolves are at the door," said Dehart. "So it's imperative to start making some modifications now."

"From a financial perspective, the city is in reasonably good shape, good financial condition," DeHart said. "However, there are clouds of uncertainty out in the future."

He said some Russell Springs streets are in dire need of black topping and need to be addressed this year.

"With asphalt $85 or $90 a ton and you can put a ton of black top in about three or four wheelbarrows full," DeHart said. "You can see how expensive that can become."

Each year, the city receives $25,000 in road funds, he said.

In 2010, the city spent in excess of $20,000 just on potholes so the remainder has to come from local funds and that means raising more money, DeHart said.

State law mandates that funds from water and sewer must be deposited in various funds to pay off bonds and loans or to build additional lines.

"Money from water and sewer is never transferred into the general fund," said DeHart. "It is maintained for these critical services."

He said the police department is critical but does not bring funds into the city treasury. "The police department consumes around 45 percent of the total budget but it's a service we can't do without and they do a super job," DeHart said. "There's some things we just have to spend money for there's no way around it."

The city coffers are also losing money due to growing unemployment and the impact of manufacturing companies leaving the area.

"We have a payroll tax but the fly in the buttermilk is this: if there is no payroll, there's no tax," said DeHart. "When there's less finances in the city, adjustments have to be made.

Those adjustments eventually may lead to a reduction in services provided by the city.

"If we want services, those services have a cost associated with them," said DeHart. "If there is no money available to pay for those services, then services have to be curtailed."

Increases in cities' contributions to employees' retirement accounts mandated by the State of Kentucky will also put a strain on funds.

"The amount of money the city must pay into a retirement account for a regular employee will be 23.51 percent," DeHart said. "For a hazardous employee such as a policeman, the city will be required to pay over 40 percent into retirement and this is in addition to the 8 percent already deducted directly from the employee's check."

He said if a police officer is making $30,000 then $2,400 will be deducted from that officer's pay for retirement and the city would be required to pay an additional $13,815. "If that police officer is married with one child, the city would pay an additional $1,004.88 per month for insurance for that policeman," DeHart said. "That means an additional $12,058.56 per year. So now the $30,000 a year employee actually costs the city $55,873."

He said for example, a regular employee who is non-hazardous and earns $30,000 per year, the city would be required to put up another $19,111.56 toward retirement. In his example, the city would be required to pay $49,111.56 that employee.

In looking for an answer, DeHart said he will not consider raising tax rates in the city.

"We're not going to talk about taxes," said DeHart. "People are paying every penny they can possibly afford to pay and some of them more than they can afford to pay."

With limited options, cutting current programs and filling city employment vacancies with existing staff will be necessary.

"The possibility exists that when we start to do the budget for this next year…I'll be looking at cutting departments back five to eight percent on their budget," said DeHart.

He said the city may also need to look at retaining police cars and utility vehicles longer before purchasing new ones in an effort to keep the city solvent.

"The finances of the city are presently on firm footing," DeHart said. "To keep them that way, the future finances of the city are something that we must continually address."

Mayor DeHart introduced and welcomed Deputy Judge Executive Chris Ramsey to the meeting.

"I'm here on behalf of Judge Robertson," said Ramsey. "We're here to listen and that way if you all need something I can pass that on to him and to the fiscal court and just kind of build a tighter relationship and see what we can accomplish together."

In other business:

• Mayor DeHart was unanimously appointed to serve a three year term on the Russell County Gas Board. DeHart has served on the board since its beginning.

• In a unanimous vote, Eric Selby was chosen as Russell Springs Mayor Pro tem.

• Three surplus vehicles including 2001, 2002, and 2004 Crown Victorias previously used by Russell Springs Police Department will be sold at auction.

• The council voted unanimously to deed property in front of the maintenance building where water and sewer is housed including a rough ditch line and a hillside to Terry Stephens.

• The city will apply for a Land and Water Grant to build a new picnic area and bathrooms at Shelter 1 at the city park by unanimous approval of the council.

• Russell Springs was awarded an $80,000 grant to fund a sidewalk project for Maple St. The council unanimously approved signing a contract to hire American Engineers, Inc. to design the project at a rate of $10,000 contingent upon receipt of the grant.