The Virginian-Pilot
                             THE VIRGINIAN-PILOT 
              Copyright (c) 1995, Landmark Communications, Inc.

DATE: Friday, April 21, 1995                 TAG: 9504200175
SECTION: PORTSMOUTH CURRENTS      PAGE: 03   EDITION: FINAL 
SOURCE: BY TONI WHITT, STAFF WRITER 
                                             LENGTH: Short :   43 lines

CITY COUNCIL MULLS TIGHT NEW BUDGET 18 PERCENT OF TAX REVENUES WOULD BE USED TO PAY OFF DEBTS; LONG TERM PROJECTS IN JEOPARDY.

It's hard to tell from their discussions what the City Council plans to do with the proposed budget it is scheduled to approve next week.

After analyzing the 429-page document over the past few weeks, the council has asked for few changes and has said little about the direction it hopes to set.

In preparing the budget, City Manager V. Wayne Orton said, the staff followed the council's goals and priorities in making spending decisions.

The following issues were highlighted during Tuesday's budget work session:

The council analyzed its options in funding the city's police and fire retirement fund or closing out that fund to any new employees and moving them to the state's retirement fund for law enforcement officers.

Costs for the lucrative city retirement plan are projected to skyrocket over the next few years, while costs for the state's plan have remained stable.

The police and fire fighters unions have urged the council to continue funding the local plan.

The council was dismayed to learn that 18 percent of tax revenues were used to pay off debts. In the building budget passed in recent months, the council trimmed an $8 million spending proposal. Some members indicated Tuesday they may be forced to trim other long-term projects in the coming years.

The council studied spending in the school system to determine whether a 4 percent cut in the city's contribution to the schools would mean financial hardship for the school system. The council gave no indication that it would add any money back into the school budget. The school board has been working in recent weeks to make the cuts to its budget.

KEYWORDS: PORTSMOUTH CITY BUDGET by CNB