JOHNSTOWN — City Treasurer Michael Gifford presented the Common Council with preliminary budget numbers Monday that showed the city may need to raise property tax rates between 3 percent and 5 percent.

Last year the council approved a $9.3 million 2008 budget with a 1.7 percent rate cut, reducing taxes to $15.53 per $1,000 of assessed value.

Under two scenarios Gifford presented to the council, the tax rate would rise to $16 or $16.31 per $1,000.

Mayor Sarah Slingerland said the city will be forced to consider raising taxes because of potential shortfalls from other revenue sources.

“The unknowns include two of our three revenue streams: sales tax and state aid,” she said.

In 2008 Johnstown budgeted $2.9 million from sales tax and $1.4 million from state aid. In Gifford’s projections, he had sales tax increasing to $3.1 million and state aid going up to $1.5 million.

According to projections, if the city left tax rates flat it would leave a budget shortfall of $459,300, slightly less than the $484,600 the city spent from its surplus in 2008.

If the city raises the tax rate by 3 percent, the budget deficit shrinks to $350,481 and if it raises the rate by 5 percent it would be reduced to $270,000.

Gifford said the city’s fund balance should be about $1.2 million at the end of this year.

“The problem naturally is we’re not at year’s end and we don’t know what the weather’s going to be between now and the end of the year. If we have to buy a lot of sand and salt, certainly that alone could impact the fund balance,” he said.

Slingerland said she hates contemplating raising taxes, but doesn’t think there is any way to cut spending enough to cover the budget shortfalls without impairing the level of services provided by the city.

She said the city’s union contracts require minimum staffing in some departments, but she could still make some cuts.

“I feel we have just the right number of people. We don’t have too many, we don’t have too few. We could always use more. But I think we have what we need,” she said. “I could cut, I suppose, a lot more … but the little bits I could cut wouldn’t affect much. You’d have to cut something huge.”

Gifford told the council that if he’d known there would be so much uncertainty over sales tax and state aid he would not have recommended the tax rate decrease in 2008.

He said the increase in fuel prices has been a major cost driver for the budget.

“The Department of Public Works for instance, in the request there, is $100,000. I never thought I’d see the day when a department here spent $100,000 on fuel,” he said.

“The reports today show oil is dropping [in price] but if we anticipate a drop and the drop doesn’t happen, we’re going to be scrambling to find funding. So, we need to take a bit of a worst-case scenario relative to fuel.”