City officials who last month proposed an increase in property taxes to cover a budget gap are now suggesting Santa Fe could tap a reserve fund instead.

City Councilor Chris Calvert is getting the credit for a new plan to use $4 million from cash balances in the Wastewater Division instead of raising new revenue through a tax-rate hike.

Calvert said Wednesday that although he signed on to a resolution supporting a change in property taxes, along with Mayor David Coss and Councilors Carmichael Dominguez, Ron Trujillo and Rosemary Romero, he was never fully committed to that idea.

"I know nobody likes a tax increase, especially now. So that was sort of the fallback position if we had to go there. But I kept looking for other approaches," he said.

A recent audit of the city-run utility turned up about $14 million in reserve cash. Although an emergency in aging underground sewer infrastructure could arise, councilors who back the idea say the risk is not too great.

Coss issued a news release early Wednesday announcing that the same councilors who supported the tax idea are now behind the plan to overturn a city ordinance that prohibits the transfer of reserve cash from self-funding city enterprises.

If that action doesn't pass a full City Council vote, however, Coss said the tax increase is not off the table.

"I think it was good work by Councilor Calvert. He got with staff and started asking questions," Coss said. "It's another option. It's not a long-term solution like the property tax is, but it's a solution for this year that does not require a property tax."

The city is facing a budget gap of about $8 million for the fiscal year that begins July 1. The city manager and Finance Committee are hammering through a plan to save half that amount by making reductions to management staff, employee benefits and other operations. Other ideas that group is considering include across-the-board pay cuts.

Councilor Patti Bushee said the recent proposal is another example of the mayor "continuing to govern by press release."

"We have not done the vetting through the Finance Committee for any of these proposals that he keeps putting out," she said. "I am thrilled that the other councilors and the mayor are trying to get away from the property-tax idea. ... Until we as a committee get the answers, I am going to have to reserve judgment as to whether or not this is the life raft that the five sponsors of the property tax hope it to be."

She also questioned whether it was fair to use that cash to balance the budget when sewer bills increased 30 percent in 2009 and customers are expecting 4 percent increases in 2012 and 2013 under an already-approved plan.

Bushee said there seems to be consensus developing around an alternative idea of a graduated pay decrease for city workers, but that such a change would require contract negotiations with labor unions.

The city has until June 1 to formally adopt its budget for the next fiscal year and to send that information to the state Department of Finance and Administration. The next city Finance Committee meeting is Monday.

After more than two hours of public testimony during recent hearings about the tax increase, the committee postponed a vote on budget-balancing ideas.

Contact Julie Ann Grimm at 986-3017 or jgrimm@sfnewmexican.com.