The city of Sutter Creek has its own budget to wrestle with.

The Sutter Creek City Council has been so tied up with the complex process behind the Gold Rush Ranch and Golf Resort project that a special budget workshop had to be called at 3:30 on Friday afternoon, pursuant to timely approval of a city budget for the coming fiscal year.

The city has been operating without a budget since July 1, but City Manager Rob Duke said, "The rule is that a city can continue to operate with a budget that is the same as or lower than the previous year's budget. We passed a resolution in July."

Budgets on all levels are being stressed by factors in today's economy. Sutter Creek is no exception, squeezed between falling revenues and rising costs.

Finance director Jeff Gardner took center stage, working his way through the pages of his presentation. Gardner used a three-column format, with the approved budget from last year on the left, the projected reality for the year in the center and the proposed budget for 2008-09 on the right. The bottom line showed a negative difference of $435,000 between what had been expected to happen in 2007-08 and what has actually occurred.

As a tourist destination, the city is particularly subject to the effect that rising gasoline prices has had on the public's driving habits. The assumption is that this was a major factor in the $120,000 shortfall in sales tax revenue for the past year.

Anticipated general fund revenues for 2007-08 had been $1,836,414. The reality is $1,686,133, $150,000 less than expected. The drop in sales tax revenue was the major contributor, with changes in administrative charges, police contract fees, and anything to do with building permits and motor vehicle license fees accounting for the rest. On the expense side, the police and planning departments ran way over their anticipated expenditures, by $125,000 and $128,000, respectively.

Duke, also the police chief, explained much of his department's expense overrun. "We had an injured officer," Duke said, "and we backfilled with various officers during the year. The resulting overtime proved quite expensive."

In reference to the planning overrun, Gardner said, "There are multiple consultants with multiple projects going. General plans must be updated periodically and the costs can run into the hundreds of thousands."

Councilman Pat Crosby inquired about some large reductions in the proposed budget. "I see the large drops in public works, streets and roads, parks and recreation," Crosby said. "Does that mean they've moved into sewer?"

"There is now SSMP," replied Duke.

SSMP is the Sanitary Sewer Management Program, recently mandated by the California Water Resources Control Board and set in place last month to meet the state's August deadline. The proposed expenses for the SSMP Enterprise Fund in 2008-09 are $327,993. Recently hired Assistant City Manager Sean Rabe will be in charge of putting this program into operation.

Among Gardner's 2008-09 budget assumptions were: No staff salaries increase; assistant city administrator managing SSMP program; full time planning technician with 50 percent reimbursement; and numerous anticipated general fund revenues, counter-balanced by Internal Service Fund expenses.

Members of the city council had suggestions. "I've said for the last three years that the parking lot should not be listed as a promotion expense," said Bill Hepworth.

"I'd like to see controls put in place for planning and other expenses," said Tim Murphy.

"When a position opens, you don't fill it," suggested Brent Parsons. "Unlike the water agency, you can't just go out and raise rates."

The council appeared resigned to accept their fate and future, but planning commissioner Mike Kirkley chose not to allow the elephant to sit quietly in the corner of the room.

"You haven't done mid-year adjustments," Kirkley began. "You hired another public works employee to replace one who left. You went ahead and hired an assistant city manager and the city manager is working as a patrol officer. You're carrying developers for hundreds of thousands of dollars and I don't see why you're subsidizing that. You seem to think that Gold Rush is the knight on the white horse."

"It's easy to come in here some months after the budget started to go off," Mayor Gary Wooten responded, "and slap us around with it."

Parsons reinforced the mayor's position. "The planning commission wasn't happy with the planners we had," he said, "and wanted more expensive planners."

Sutter Creek resident John Motto-Ros told the council, "We could save 30 or 40 thousand by not paying both sides of PERS (Public Employees' Retirement System)."

Duke quickly replied that other cities in the Mother Lode pay both sides.

Motto-Ros also addressed the higher than expected cost of operating the city swimming pool. "If the swimming pool keeps one kid out of trouble," he said, "it's worth every cent."

In other business at Friday's meeting, the council approved three items on the consent agenda. Two were resolutions approving grant applications to the Sierra Nevada Conservancy for funds related to the Knight Foundry acquisition project. The third was a resolution approving a revised parcel map for the Sutter Creek Crossroads project at the intersection of Ridge Road and Highway 49.