Anderson Mayor Kevin Smith and city controller Sam Pellegrino are asking every city department to make cuts to their budget — and some requests go as high as 20 percent.

But layoffs are not the way the city wants to accomplish that, Smith said.

"The rumors about significant layoffs are not true," Smith said Monday afternoon. "We have no plans to lay off people in the near future."

Pellegrino said he has contacted department heads and asked them to cut as much as they can. He hopes to have those changes in place by the end of the month.

"I gave 20 percent as a guideline," he said. "We need to get down there. We are borrowing money from utilities to pay our bills."

Pellegrino said that if departments can make larger reductions that would be even better. But he understands that if some departments cut 20 percent, they would be wiped out. So there is some flexibility, and reductions will vary between departments.

"Twenty percent is an aggressive request by Pellegrino," Smith said. "I don't know if we can meet that demand across the board."

Smith is trying to reverse the borrowing of the last few years, when loans of $4 million each year were received just to cover early-year payroll expenses. The reason this happens is because the city has not budgeted for an operating balance — funds that would allow the city to cover payroll during the first part of the year until the state makes its first tax repayments in May or June.

Property tax revenues are only paid out twice a year, which means the city does not have a continuous 12-month cash flow, Smith said.

The city currently has no operating balance. Past practice has been to borrow money from the city's utility reserve fund or the Indiana Bond Bank, which requires a small interest added to the repayments.

There are several areas of department budgets that concern Smith. One of them is overtime expenses.

Based on how much overtime the fire department has paid so far this year, if it continues at that pace, it will be in the hole by more than $50,000 at the end of the year, Smith said.

Smith said that he cannot discuss the budgets and manpower at other departments because of labor negotiations.

The city has six union contracts, and five of them are due for negotiations this year, said human resources director Wayne Huffman. Those unions are Fraternal Order of Police, International Brotherhood of Electrical Workers, United Auto Workers, American Federation of State, County and Municipal Employees, and Utility Workers Union of America, he said.

Pellegrino approached department heads a few weeks ago to request that they submit proposals on how to reduce their expenses.

"Some of the department heads have already contacted me and told me their game plan," he said. "I would rather them do it than me."

Since first discussing this with departments, the county learned it will be getting some unexpected money from the state, about $3.2 million from the state's $206 million accounting error. It should help reduce the extent of cuts this year, Pellegrino said. Smith expects Anderson will receive less than $1 million.

Smith said that every government has money, but the key is to determine how to prioritize budgeting needs. He is trying to prioritize those expenses this year, so that the city can move in the same direction next year.

"Realistically, in Anderson we continue to decline in revenues and population," Smith said. "We can't continue to do things as we have always done them."