Times are lean in Oak Harbor city government.

At a city budget workshop this week, it was reported that even after $2.3 million was pared from the proposed 2009 budget, a gap of $287,453 still remains.

“Our revenue has stagnated and we’re pretty much where we were in 2008,” said City Administrator Paul Schmidt about planning for the 2009 budget. But the budget still isn’t balanced, he said.

“After tonight, the mayor and staff and I will close that gap,” he said.

During a five-hour meeting Tuesday night at the Oak Harbor Fire Station, city council members listened to presentations from the heads of city departments. Each speaker presented cuts that will be reflected in their portion of the general fund budget in order to stay within their program’s fiscal allowance.

A decrease in city general fund revenue from property tax and sales tax, which make up 60 percent of the budget, is behind this year’s budget-balancing challenge, said Doug Merriman, city finance director.

Property tax is capped at a 1 percent annual increase, the result of a 2001 citizen initiative. Sales tax is down 8.5 percent from 2007 due, in large part, to the decrease in car sales, reduction of construction projects and declining general retail sales.

The drop in sales tax revenue makes for $165,000 less than what the city received in 2007.

Increased expenditures from inflation, including the rising cost of medical benefits, fuel and commodities, have made the budget balancing process increasingly difficult. The skyrocketing costs of commodities such as steel, concrete and asphalt have risen between 10 and 50 percent, said Merriman.

Although overall revenue is up “1 to just more than 2 percent,” according to Merriman for the 2009 and 2010 budgets respectively, total expenditures are up “4 to 5 percent,” making those budgets difficult to balance, he said.

“This is probably the most difficult year that we’ve had to balance operations with budgets. We’re trying to plan for the future and create a strong financial picture,” he said.

The City Council will hold a 45-minute workshop at City Hall on Oct. 21 at 6 p.m. Another budget workshop covering the utilities and marina budgets will take place at the Oak Harbor Fire Station on October 29 at 6 p.m.