The city's financial manager told city council last night she forecasts an estimated $304,000 deficit at year's end.

Valerie Anderson, Whitehorse's financial manager since April, read a second quarter variance report to inform council where city spending is standing.

'The 2007 operating revenue and expenditures report indicates that, at present, there will be a deficit at year end compared to the revised budget,' she read from a prepared statement.

The $304,655 projected deficit is a figure that will likely change, she said to the councillors.

'Because large portions of our activities take place during the summer months, a much clearer picture of operational results for the year will be available at the end of September.'

If the year ends with a deficit in the $300,000 dollar range, Mayor Bev Buckway has said she will not rule out further tax increases following last year's five per cent increase.

'I wouldn't say it's not an option,' she said Tuesday morning. She said any tax increases would reflect budget projections for 2008, and not as a direct response to a 2007 deficit. 'My preference is to keep pace and do smaller increases rather than one big increase,' she said.

Buckway said she has found Whitehorse residents to be forgiving of the tax increases of recent years.

'When we did come out with the five per cent, we really didn't have much of a reaction from the tax payers,' she said. 'A few had negative comments, but generally people were saying, It's about time'.'

Tax increase discussions have not been held yet, said Buckway, as city managers are brainstorming ways to cut back on unnecessary expenses in light of the projected deficit.

Anderson said there are a number of reasons for this year's deficit, but explained those that accounted for $50,000 or more over their budget.

'Unexpected audit costs associated with year end and payroll issues, and the payment of a large insurance deductible as a result of a liability claim settlement,' accounted for variances in the city's financial services department, she said. The department is anticipated to finish the year with $97,371 more in expenses than their projected budget.

The parks and recreation department brought in $83,000 more than expected after more people than expected signed up for various leisure programs, notably the march break camps held during the Canada Winter Games. This surplus 'partially offsets additional administrative costs due to the popularity of the programming and increases in facility energy and maintenance costs,' said Anderson, referring specifically to the upkeep costs of Stan McCowan arena, which is in the works to be decommissioned and sold.

Councillor Doug Graham asked if the parks and recreation deficit of $4,938, or any of the city's deficit, could be directly attributed to the Canada Winter Games. Anderson said this was not definitively the case, but that her office would look into this.

This year's increases in private and government building permit fees mean the city's planning and building inspection brought in an extra $37,000. This was offset by a $68,014 deficit stemming from 'higher than expected advertising costs' during the planning study plebiscite, the Arkell referendum and the Lower Bench charette.

The maintenance and safety services branch is the biggest culprit in the deficit, with zero listed revenue and $235,100 in over-budgeted expenses.

'A variety of roof repairs and replacements, increased vehicle usage, and fuel and equipment maintenance costs have resulted in a significant overage,' said Anderson. This branch's deficit has also meant that plans to replace the fire hall will be deferred to 2008 due to increases in cost, allowing for time to review funding alternatives, reads the variance report.

In total, city departments brought in $319,421 in unexpected revenue, but overspent $624,076, accounting for the $304,655 deficit.

As the projected deficit is just an estimate, Anderson said she is in no position to predict what cutbacks, if any, the city would make to rebalance the deficit by the year end.

'Administration will be closely reviewing all further spending plans with the goal of reducing expenditures and achieving a balanced budget,' she said to council.

After a meeting with city department managers Tuesday morning, Buckway said all city managers will be asked to be conscious of keeping things tight until more is known at the end of September.