The spring mayoral race in Farmers Branch featured an emotional debate over the city's finances.

Candidate Gene Bledsoe accused the City Council – including his opponent, Tim O'Hare – of spending wildly on items such as a giant American flag and the city's attempt to ban housing rentals to illegal immigrants.

Mr. O'Hare countered on his Web site that Mr. Bledsoe was "trying to fool people. ... Our financial situation is very strong."

And it's good enough to hold the line on the tax rate, maintain free garbage pickup service and provide for a 3 percent across-the-board raise for employees. That's according to the city's $93.4 million budget, unveiled at a workshop last week.

But the finances aren't good enough to leave the city unscathed during these tough economic times. Last month, the city announced it was cutting 20 full-time and eight part-time positions and planned to raise water and sewer rates, impose higher ambulance fees and raise gas franchise fees – all to close a projected $1.6 million budget shortfall.

That prompted Mr. Bledsoe to reiterate his stance at the budget workshop.

"There's no doubt in my mind the city manager and City Council intentionally misled the citizens of Farmers Branch as they have continually done about the financial condition of the city," he said.

City Finance Director Charles Cox denied any deception. He said conditions just took a turn for the worse over the last couple of months – mostly trickle-down from the anemic national economy.

"We're in perilous times," council member Ben Robinson said at the workshop. But days later, he said that despite it all, the city's finances are in "great" shape.

"Good heavens, people who say we're not in a good financial situation are just not reading the numbers," he said.

The budget also includes funding for a new animal shelter, continued development of Liberty Plaza, beautification of Valley View Lane, installation of more of the new street signs that went up this year, development of a skate park and street improvements.

Mr. Cox said that since the campaign, there have been changes in the city's financial situation, most of which are the trickle-down effect from the national economy.

Property tax revenue growth will be much flatter than anticipated, despite significant new multifamily construction on the city's west side, mostly because of more appeals on commercial valuations.

In addition, the cost of fueling the city's vehicles is up $162,000; electricity costs are up almost $425,000; legal fees to fight challenges to proposed anti-illegal-immigrant ordinances add $244,000; state-mandated adjustments to the retirement system are costing $120,000; and landfill revenues have declined $430,000.

Increased charges for water from Dallas Water Utilities and for sewage treatment by the Trinity River Authority are prompting a proposed 12 percent increase in water and sewer rates that would add $6.70 to the average residential customer's bill.

A proposed increase in the gas franchise fees, to be more in line with other cities, would add 50 cents to the average residential monthly bill and $3.50 to the average commercial bill.

And a proposed ambulance fee increase would raise rates between $50 and $150 for residents, based upon the level of care needed, and by $100 to $150 for nonresidents using the service.

The budget "puts us in a position to be ready for an economic comeback," City Manager Gary Greer said.

Mr. Bledsoe said the council had been using more discretion in spending since the May election.

"It may be too little, too late, but at least they are exercising some fiduciary responsibility right now, and I hope that continues," he said. "The city can't afford these excesses these guys have been engaged in [in] the past – $62,000 flags and the like."

Council member David Koch said the hardships faced by Farmers Branch, other cities and citizens around the country because of increased energy costs require action.

"We owe it to the citizens to speak much louder and more often to our elected officials ... in promoting actions in Washington or even in Austin that help lower the costs we're experiencing."