North Bend's drive to craft a budget for 2005-06 got off to an optimistic start Tuesday night, with city staff members predicting the government will be able to upgrade police and maintenance services and avoid staff cuts.

The budget "provides for continuity of services in all departments and allows for much-needed capital improvements," City Administrator Jan Willis said, as she introduced the plan to the City Council and Budget Committee began reviewing in a two-hour meeting at city hall.

The budget proposal features a general fund of more than $5.87 million. Members of both bodies expected to finish spending plans for both the city government and the separate Urban Renewal Agency at a follow-up session at 7 p.m. tonight, also at city hall.

After approval by the combined body, the budgets will go to the City Council for ratification before the fiscal 2006 cycle begins on July 1.

Police and fire protection together account for more than half the general fund, the former being allotted some $2.12 million (37 percent) and the latter about $1.13 million (19 percent).

Smaller shares, all under 4 percent, will fund the community swimming pool, public works, and parks and recreation programs. Administrative services are to consume 3 percent of the total.

The budget leaves a total of $725,000 unappropriated, 12 percent of the general fund. The city cannot spend that sum except to respond to natural disasters, riots or other extraordinary circumstances.

In her introductory speech to councilors and committee members, Willis outlined a budget marked by spending on several upgrades and additions, especially for the police and street maintenance.

North Bend Police will receive funding for one and possibly two new squad cars, as well as a refurbishing of its headquarters inside the city hall building. The street department will move from its current home at the North Bend Municipal Airport to a new city shop; its opening is scheduled for August. Finally, North Bend will purchase the site of its wastewater treatment plant from the Coos County Airport District and lease a neighboring lot from that agency.

North Bend will draw from a deeper pool of property tax revenue, budget documents indicate. The city's aggregate property value was more than $479 million at the beginning of this calendar year, up $14 million from the start of 2004.

Insurance premiums, the bugaboo of many city budgets, will account for much of North Bend's spending increases under the planned budget. It reserves funds in anticipation of a 10 percent hike in liability premiums, a 15 percent jump in health insurance rates and a 23.5 percent share of payments under the state Public Employees Retirement System.

This last, Willis told the council and committee, depends on the outcome of state court cases. The most recent rulings on PERS, by the Oregon Supreme Court in March, struck down certain cost-saving measures such as guaranteed returns on accounts tied to the stock market as breaches of contract with civil servants.

Still, even those cost increases were not enough to concern Willis too deeply about North Bend's financial state.

"Are you positive about this budget?" asked Larry Watson, a Budget Committee member.

"I'm positive whenever you can have a budget that doesn't involve laying off people, reducing services," the city administrator replied.

The planned Urban Renewal Agency budget, which councilors and budget officials will discuss tonight, totals about $1.55 million. The bulk of that total, $992,000, will take the form of a federal transportation grant and will go toward construction of a pier and boardwalk in the waterfront district.

Representing the City Council on Tuesday were Mayor Rick Wetherell and councilors Frank Amatisto, Howard Graham, Susan Ottemiller and Bill Richardson. Councilors Larry Garboden and Janet Rubin did not attend.

Budget Committee members present were Vickie Clark, Tom Graham, Pat Choat Pierce, Dick Wagner, Watson and Ruth Wiley. Lee Golder was absent.