Raleigh, N.C. — A hiring freeze and cuts in spending should help Raleigh balance its budget this year, city officials said Tuesday, but they already are worrying about the 2009-10 budget.

The recession will leave the city with about $5.1 million less in revenue for the 2008-09 year than budgeted, according to figures released Tuesday. Small gains in property tax revenue and license fees were offset by sharp declines in sales tax revenue and inspection fees – they're off by $3.8 million and $4.6 million, respectively.

"It certainly is a matter of concern, and the council is following it very carefully," Mayor Charles Meeker said.

Still, city officials said, they expect to end the fiscal year in June with a $6.9 million surplus at the end of June after cutting expenses by $34 million, including saving $15.5 million through a hiring freeze and $15.2 million through lower fuel costs, limiting travel and cutting back on supplies.

"We've been scaling back expenses ... (having) soft hiring freezes where it makes sense and freezing some capital maintenance items," City Manager Russell Allen said.

Allen said the city will still fill vacant positions in the fire and police departments when officers or other employees leave. However, he said neither should expect to see the employee base expand.

“I’ve seen enough of the numbers so far to know it's going to take that kind of holding the line on base budgets," Allen said about keeping the budget balanced.

The $6.9 million balance would be higher than the $5.2 million surplus at the end of the 2007-08 fiscal year.

Officials said they are more concerned now with balancing the 2009-10 budget. The City Council will begin budget discussions next month.

"In terms of what we do next year, we're going to have to keep a very close eye on that," Meeker said.

"Revenues will likely be off a substantial amount in total – we'll have a total year of sales tax lower," Allen said, noting projecting revenue over the next 18 months is difficult because the the sliding economy.

"The sales taxes are going to fluctuate," Meeker said. "We'll see where those are in May, and we'll have to make decisions based on that. It has been our policy not to raise taxes during times like this, but to try and get our spending down."

That means the hiring freeze will likely remain in place as officials look for other ways to cut back, Allen said.

"We have a higher demand for service – we're still growing – (but) we're not going to be in a position to add employees in next year's budget," he said.