Money woes, Winslow Way continue to dominate talk at City Hall.

Like the city, Kathy Blossom was in hot water Wednesday night.

Unlike the city, she was happy to be there – at least until a discussion at City Hall drew her out.

“I was enjoying a nice hot bath and listening to you,” Blossom told leaders seated behind the dais, and the few stragglers who’d endured into the late hours of Wednesday’s special City Council meeting. “And I finally said this is it, I’m out of here.”

Of all the comments coming through her television set, it was one about water – specifically, a suggestion that the city should consider taxing non-city water utility customers – that sent Blossom scurrying from tub to towel, and then racing in her car to City Hall to deliver a message in person.

“You’re just looking for money,” she said. “That’s what this is about. The fundamental thing you forget when you’re looking for money is that you’re talking about taking money from me, you’re talking about taking money from (another audience member), from yourselves. The money that you’re looking for doesn’t just come out of nowhere – it comes out of people’s pocketbooks.”

Blossom’s comments came after more than three hours spent discussing the city’s pocketbook, which has been depleted of late.

Revenue problems, due in large part to a slowdown in the building and real estate sectors on which the island’s economy depends, have become the focus of recent meetings at City Hall.

If current trends continue, the city could be as much as $2.5 million off its revenue projections by the end of the year.

The theme continued Wednesday as finance staff presented a financial capacity analysis detailing funding sources, expenditures and how much debt the city can carry.

The analysis aimed to inform ongoing work on the city’s capital plan, which is slated for June approval.

Still absent from the mix are final financial numbers from 2007, which by state law must be tallied by the end of the month. Finance Director Elray Konkel said he anticipates the city’s beginning balance to be between $500,000 and $600,000 less than anticipated. Answers about another lingering uncertainty – $3.85 million of city money toward the purchase and preservation of the Quay Bainbridge Apartments – are expected later this month.

Konkel said the city’s debt capacity isn’t diminished, as some contend.

It costs the city $80,000 per year for every $1 million in debt. Staff projected the city could realistically spend $6 million on new capital work; more extreme forecasts would allow for as little as $2 million, or as much as $9 million in capital spending.

The city has on average spent $6.6 million annually on capital projects over the past four years; $3.75 million in debt is budgeted for 2008.

Other than Winslow Way, funding for specific projects wasn’t addressed in Wednesday’s discussion.

Instead, leaders debated the accuracy of the projections and mulled possible ways to raise new funds, including additional utility taxes, impact fees, the sale of surplus properties and a local Motor Vehicle Excise Tax that would cost island drivers $20 per registered vehicle.

Blossom, who owns the South Bainbridge Water System, said a new utility tax would be a mistake.

“It’s just not a fair way to try to fund the city,” she said. “It’s a straight pass through directly to the customers.”

Reseting the city’s annual contingency funding level and restructuring current debt were among the suggested ways to save money.

The city already is cutting costs, according to City Administrator Mark Dombroski.

“To the extent that we don’t have revenues, regardless of the amount you adopt, we can’t spend more than we have,” he said. “I’m not waiting for approval to tell me to spend less money – we’re already doing that.”

Councilman Kjell Stoknes said he’s encouraged by the progress of staff and Dombroski, who recently took over as city administrator.

“Im very confident we’re going to see good financial information coming through very soon,” Stoknes said. “I’m ready to trust in the teamwork I’ve seen between administration and council.”

Others said they still don’t have enough financial information to make decisions, particularly on the Winslow Way project.

“I do trust, I want to trust,” Councilwoman Debbie Vancil said. “But trust needs to be verified, and it needs to be verified with the information that we need to make decisions. I cannot support this at this time. I feel like it’s out of the proper planning process.”

Councilors voted 4-3 – Vancil, Bill Knobloch and Kim Brackett opposed – to have staff present at next week’s meeting a revised contract for the project, which has been scaled down to $11.3 million worth of infrastructure repairs, plus $1.4 million in optional above-ground work.

Planners last month said the city should push back the project’s start date by a year, to spring 2010, and split the design work into four phases.

The first phase would cost $240,000, and would be funded by $187,000 carryover bond money and $53,000 in utility funds.

Some questioned the need to push ahead before the financial situation is clearer. Planners said a more complete design could improve the city’s chances of landing as much in $2 million in grants that will be available later this year.

Knobloch urged caution given the financial uncertainty, saying the city’s projections don’t sufficiently account for the continuing rise of oil prices, the effects of which are reverberating through the economy.

“This is not chump change,” he said. “I’m asking you to seriously consider delaying this until we find out exactly where we stand.”

Vancil asked point blank why the city needs to move ahead now.

“Well, we could stop the project,” Dombroski replied. “I have no idea what will happen to the utilities if we wait six months or a year. It could fail or nothing could happen. I don’t know. I think that’s a policy choice for the mayor and council to decide.”

Councilman Barry Peters said he supports the timing of the project. He said too many people have unfairly criticized the city for not having firm financing in place.

“It’s a mistake for the community to think we don’t know how we’re going to fund this project,” he said. “We have a plan. I think we clearly have the capacity to proceed.”

Though a few members of the public spoke at the end of the meeting, an extended public comment period was rescheduled for next week’s capital plan workshop. Vancil said she will propose a motion on Wednesday that would allow for more dependable comment periods, and prevent them from being truncated or moved, as they frequently are now.