Just after Ithaca Common Council voted to adopt the city's 2010 budget, the city controller warned of tough times ahead and Mayor Carolyn Peterson for the first time hinted at the possibility of personnel cuts.

Common Council officially adopted the $58,431,727 City of Ithaca 2010 budget with a unanimous vote Wednesday night. The tax rate will be $12.31 per $1,000 of taxable value.

"I don't see the financial activity for the city improving any time soon," City Controller Steve Thayer said. "I believe we're in for a period of time with difficult challenges and decisions ahead of us."

Peterson said she, Thayer, and Human Resources Director Schelley Michell-Nunn have been holding employee forums about the budget and will continue through next year.

"We have explained to the employees who are there that we feel these budgets are trimmed as trim as we can make them, and our largest expense is our personnel items. That's what we're going to have to watch for and possibly prepare for," Peterson said. "We talked about this a little bit during the budget process: Should we have cut now? Should we have opened up contracts? Other ways to deal with the payroll costs? But this is something we will continue to watch, as we have been."

A hiring freeze Peterson instituted in October 2008 remains in place. However, a vacancy review committee allowed at least 24 hires to go forward since then. Peterson announced the latest hire Wednesday: Ithaca Police Lt. Pete Tyler has been hired to fill the second deputy police chief position, opened when Ed Vallely became chief.

The 2010 budget had to account for a $2.5 million shortfall from drops in sales tax revenue, building permit revenue lost to slowed construction, especially at Cornell University, increased debt costs, and an unexpected $1 million in state pension increases.

While some economists are declaring the recession over nationally, the city hasn't seen improvement, Thayer said. The most recent sales tax payment was down more than 8 percent compared to last year, he said.

"As the budget grows tighter, with less flexibility, it will require increased cooperation from all parties within the city," he said.

Buoyed by increased property values, the tax levy will rise 4.25 percent in 2010. The consumer price index for the 12-month period ending in September decreased 1.3 percent.