A slowing economy and rising health insurance costs have pounded Gainesville’s budget, but residents may not feel the hurt in their tax bills.

City officials recommended a balanced budget for fiscal 2008-09, which begins July 1, with no change in the tax rate at Thursday morning’s City Council work session.

City Manager Bryan Shuler said the budget was produced largely because the city held the line on new hires and department heads whittled spending lists as asked.

Also, the city plans to absorb sizable increases in fuel costs and is mostly absorbing health insurance premium increases.

"I remain concerned about fuel costs," Shuler said. "... They don’t seem to be heading in the right direction."

Council members applauded city officials’ work.

"With rising costs all around, you should be commended for your hard work and diligence," said Councilman George Wangemann.

"Ditto, ditto, ditto," said Mayor Myrtle Figueras.

Shuler did caution council members about next year’s budget.

"I hope our economic picture improves, but it could get worse," he said. "That’s something we all need to keep in mind."

The council is set to hold a first reading and public hearing on the budget at 5:30 p.m. June 3 in the Georgia Mountains Center. Final approval is set for 9 a.m. June 17 at the center.

City officials are recommending a $2.20 monthly increase in trash pickup fees to help offset higher landfill and recycling costs.

The city’s general-fund budget, covering basic services such as municipal court, fire and police and transfers to the Georgia Mountains Center and other city funds, is proposed at nearly $28 million, or 2.5 percent less than this year’s $28.7 million budget.

Fuel costs are budgeted at nearly $1.2 million, or 14.7 greater than this year’s amount of just above $1 million.

"If fuel costs get much higher, we’re going to have some challenges," Shuler said.

Health insurance premiums are expected to jump 55 percent to $6.4 million from $4.1 million. The city projects to pay $4.9 million, or 77 percent, of next year’s amount, compared to $3.1 million, or 74 percent, this year.

"I feel like there should be some incentives for employees to take care of their health," Wangemann said. "I hope we can look at health care costs and ways we can save money."

In the meantime, though, to balance the budget, city officials had to bring out the chopping block.

"Our departments stepped up to the plate and allowed us to get this budget to you in this form," Shuler said.

Wangemann said, "There is no doubt we have some struggles, but it behooves us all to be patient to endure (the weakening economy), and we will get through this one way or another."

If revenues improve during the year, city officials would like to increase the amount set aside for employee raises, per department, to as high as 5 percent from 3 percent, Shuler said. Employees receive merit increases.