Coatesville City Manager Harry Walker not only believes he can halt the city's financial bleeding by next year, but he can also give city property owners their first tax cut in a decade.

Walker provided a preview of his proposed $8.4 million budget at a public work session that only two council members, Patsy Ray and Karen Jorgenson attended. No city residents or any of the four recently elected council members were there.

Walker is hoping that he can pull off a one-mill tax cut by cutting expenses from last year by $1.8 million. Last year the city budget $9.4 million in expenditures, but the city finance office is projecting by year's end the city will have spent $10.4 million. A large section of the over budget spending was related to a lengthly arson investigation. However, the state provided the city $500,000 to help cover dramatic increases in police overtime.

Walker is keeping the full budget proposal from the public until it is preliminary approved by council. But figures released Thursday night show Walker and his administrators have some more cutting to do because expenditures estimated to be $10.6 exceed city revenues by $136,691.

At Monday's council meeting a split council agreed to Walker's request to draw down $1.5 million from the Trust Fund. Walker says the money is needed to cover expenses this year and to help in 2010.

Despite the city's dire financial position, Walker believes that their will be sufficient revenues to allow for a tax cut. "There's a decrease in real estate taxes, but we will still bring in the same amount of money," he said.

"How are you going to do that?" questioned Jorgenson.

"We're looking at projected activity, and we think some things will happen, said Walker, referring stalled redevelopment projects. If any of the city's redevelopment projects got underway next year, it would generate large revenues from building permits. However, the figures released by Walker did not provide those estimates.

The largest expenditure forecast for next year is $5.8 million for employee salaries and benefits. At the Oct. 26 council meeting, council voted down Walker's request to lay off 11 full-time and part-time employees which would have saved taxpayers $470.000 in annual salaries and benefits.

The largest projected salary expense, $2.8 million, is for hourly employee wages, according to figures released by the city. Department heads are projected to collectively earn $444,050 and professional staff $347,672. Walker will be paid $87,818, under the proposed budget.

Walker is projecting that city Solicitor Andrew Lehr will earn $165,000. The city is also budgeting that it will pay $77,500 in special legal services, $20,000 in labor negotiations and $20,000 in labor negotiations.

Other expenses are categorized as following: supplies, $228,372; professional services, $413,500; communication, $98,854; insurance, $680.436; utilities, $143,200; repair and maintenance, $174,200; rental fees, $4,900; contracted services, $327,298; and bond payments, $285,000.

The proposed budget doesn't provide funds for the city's two swimming pools or summer camp. Walker said the pools won't open and their will be no summer camp unless private donors come forward.

Walker started his budget presentation by listing fiscal challenges the city faces next year. He projected declining revues from an economic downturn. a loss of employment which will mean lower wage taxes, and developers having difficulty acquiring financing which will translate into lower building permits fees and transfer taxes.

The highlights, said Walker, include the police force being fully manned with 35 uniformed offices and a strengthening of the city's two fire houses. Walker said the city plans to purchase a new fire truck that will be paid through state grants.