REED CITY — Back in January, things looked considerably rosier in Reed City than they do now.

In an interview kicking off the new year, City Manager Ron Marek reported, “The budget in Reed City is sound and the city is keeping its head above water.”

“We are monitoring things very closely so as not to stretch our assets too thin,” he continued.

“We are not suffering in any area. There are some concerns with energy costs. There also were some unintended expenses as the Wastewater Treatment Plant. Still, things have settled down and we are running pretty close to budget.

“We don’t anticipate making any layoffs in any area, so we also don’t anticipate needing to cut back on any programs.”

How quickly things can change.

Despite the city team’s best efforts, and because of a ‘perfect storm’ of outside factors, Reed City planners are now looking at things differently than they did just a few months ago.

“Time has passed, and reality has set in,” said Marek.

“Today, we are much clearer with regard to how revenue sharing cuts by the state are going to affect the city.

“When it comes to our statutory revenue share, it is clear that basically speaking we won’t be getting anything. All of it is ... gone.”

This will hack some $70,000 out of the city’s general fund.

In addition to that, a clearer picture regarding the municipal tax assessment shows Reed City stands to lose approximately $20,000.

“When we added everything up, we actually found a deficit of $160,000 in the general fund,” Marek said.

“This is a huge problem.

“We really have no place from which we can really shift moneys into the general fund. We can, however, tap into our fund balance reserves. This will help, but it’s not something any organization wants to do.”

Marek notes that in years pat, and as continuing policy, the city has become very efficient stewards of the public bank account.

The problem really is created when cash flow into that account is disrupted to the dramatic degree that is has been recently and will be again this year.

“We certainly don’t want to get into a situation in which we are draining off the general fund balance too much,” he said.

“We try to protect those funds as best we can.

“The city can only use general fund balance money with action by City Council.”

The city will need to be tapping into the general fund balance this year, but that will not totally alleviate the problem ... or problems.

“My initially budget, created after a lot of penny pinching, managed to save us some $60,000,” reported Marek.

“I simply didn’t see any way to balance the budget other than to begin layoffs.”

In the city’s first budget workshop, Marek proposed laying off one full-time police officer.

“This created a lot of rumors around town that we were closing the police department,” he noted. “That simply isn’t so.

“We have looked at reducing part-time police officer hours and eliminating one full-time position.

“It’s tough. It is something I never wanted to do.

“Even taking this step, however, we would still need to take some $21,000 out of the fund balance.”

Marek pointed out that obviously Chief Chuck Davis is not happy with the situation.

“This is a team that has worked hard to make sure we have a safe and secure community,” he said. “It’s a hard thing to do ...a tough decision.”

This was all in the first review of the budget.

Then things changed — a bit.

“We went back to the drawing board,” said Marek.

“It was determined that we could and would continuing funding the full-time police officer for six months in hopes of pulling down a C.O.P.S. grant that would provide additional funding for a police officer for three years.

“We won’t know if we actually receive that funding until October.

“If we are awarded the grant, this will begin at the start of the calendar year, so that is why we will make every effort to reach that date with a full staff on board.

“There is a lot of thought going into this decision. We don’t want to take steps backwards, but we must balance the budget.

“If we get the grant, everything stays the way it is at this time. If we don’t get the grant, we’ll review the situation.”

It isn’t only the police department being affected.

“We have cut all the part-time labor out of the DPW,” he said. “We are cutting in several different ways, but there are problems in the way different city departments are funded. So, it may not always look as though we are being fair across the board.

“We must take hard steps when were faced with a year in which we lose $100,000 in revenue.”

The city is considering a range of ideas to generate a little bit of revenue — everything from renting space on water towers to phone companies, to reviewing the funding of liability insurance.

“We are looking at any way we can both save money, and create revenue,” said Marek.

“We need to watch our budgets and approach our problems wisely.

“We have a lot of work to do in the next six months.

“We are in tough shape but I’m confident we can continue to keep out heads above water, but things have changed a lot since January.

“Things have changed a lot.”