Spending money where it would make a difference for the city and its residents appeared important enough Monday for at least some Lewiston city councilors to dig into forgone taxes.

"If we are talking about things that need to be done," Councilor Dennis Ohrtman said, "I'm willing to bite that bullet."

Forgone taxes are those within the 3 percent annual cap the council chose not to levy in previous years. The standard increase most years is about 2 percent. Lewiston has left almost $1.3 million on the table, or the equivalent of almost a 10 percent property tax hike if the entire amount was levied at once.

A 2 percent increase in property taxes for the budget year starting Oct. 1 would generate about $262,000, and growth in construction and valuation would bring in an estimated $150,000. That still leaves a deficit of $412,000 if all the capital improvement projects proposed for 2008 were funded, said Daniel Marsh, the city's administrative services director.

Mayor Jeff Nesset said the feeling he gets from the council is it's willing to look at fees for some services, but people need to decide if they have the political will to impose forgone taxes to get some things done.

Councilor Douglas Havens said he's generally not in favor of forgone taxes, "but I'm in favor of discussion," particularly in areas of public safety and public health.

If that gets headlines, Nesset said of councilors' kidding that anytime forgone taxes are talked about, it's news, perhaps citizens will show up at budget talks.

"I don't think I'll be here that day," Havens said.

Councilor Jim Kluss said he likes the idea when savings are identified in existing budgets, they become money to do bigger and better things. He's not willing to go forward with a lot of tax or fee increases until the city has looked at all the places for potential savings.

Councilor Garry Bush said he's willing to look at fees for services where a few people have been subsidized by residential taxes.

It depends on what it is when it comes to voting on any tax increase, Councilor Barbara Davis said. There are things she would consider if she thought it was important to the public and not a knee-jerk reaction to something, she said.

Mayor Pro Tem John Currin didn't attend Monday's meetings.

Sidewalks got the most mention as a place the council could spend a sizable chunk of money and make noticeable progress. Continuing to improve the city's share of the water system so fire flows and fire hydrants are adequate for new development also was high on City Manager John C. (Jay) Krauss's list.

One of the difficulties of budgeting, he said, is the cost of Valley Transit, which isn't held to the same accountability as city departments.

A letter from Valley Transit's board president, Joe Wagner, received Monday by Krauss says the nonprofit operation expects a shortfall of about 12 percent for this fiscal year, and possibly more if fuel prices continue to increase.

The options are to increase the contract ceiling from the present $274,512, which is an 11 percent increase from the previous year, to a minimum of $308,000 by the end of this year or to significantly cut services, the letter says.

Valley Transit is open to alternative proposals to meet the deficiencies, the letter stated.

Some cost overruns come down to the definition of "unanticipated costs," Krauss said.

A breakdown of costs for the first six months of this fiscal year projected out over 12 months and compared to 2006, show labor up 13.88 percent and benefits up 21.77 percent. Services, apparently for maintenance of Valley Transit's aging fleet, are expected to be up 53 percent.

The council has seemed generally supportive of Valley Transit and eventual expansion of services. But the city's contract with the bus service is up Sept. 30, Kluss said. "So it's up to them to impress us that they are doing a good job with their funding, or the city can start its own or not worry about it."

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Lee may be contacted at slee@lmtribune.com or (208) 743-9600 ext. 266.