With two months remaining before the city of Santa Fe must nail down details of its next annual budget, tensions are high as officials continue to weigh both spending cuts and tax increases.

The city Finance Committee heard two and half hours of public testimony from residents Monday night but didn't vote on how to cover a projected $8 million deficit for the fiscal year that begins in July.

Although a proposal to raise the city's property-tax levy has support from most of the elected city governing body, some officials hinted at a possible compromise.

Mayor David Coss and half the city councilors — including Chris Calvert, Carmichael Dominguez, Rosemary Romero and Ronald Trujillo — already have joined in support of a tax hike they say would bring in $4 million in new revenue by adding 1.16 mills to the current property-tax rate.

The remaining shortfall would be covered through slicing spending, including cuts to police and fire overtime pay, supervisory changes and incentive programs, as well as fee increases.

Of about 40 people who spoke Monday, a dozen said they unequivocally support such a property-tax increase if the alternative is cutting city services. Most speakers, however, expressed concern about a tax hike that they said would hurt too much.

Opponents of the tax proposal included the Santa Fe Association of Realtors, whose president said the organization isn't convinced that city decision-makers took a hard enough look at municipal finances before a majority turned to taxpayers during a time of economic stress.

Tim Layden said the commercial and residential property business that he operates with his brothers will, like other property owners, need to pass along any tax increase to tenants through higher rents.

"What we are seeing is a lot of my tenants are having a really, really rough time. They are hanging on by a shoestring," he said, adding later that if property-tax bills increase, he would "have to turn around and start raising the rents."

Some who oppose the tax idea have cited inflated figures with regard to how much it would change their tax liability. While the proposed increase would represent a 41 percent hike in the city's portion of taxes, the city's tax increments make up only about 11 percent of the total taxes applied to each property by various jurisdictions, including the county, state, community college and school district.

Supporters of the tax hike include labor organizers from the public and private sectors. Also backing the tax proposal are nonprofit groups that depend on the city for funding and provide direct services to people who they say would be most affected by potential cuts in areas such as transit services.

A coalition that formed to advocate for the higher tax distributed neon-green stickers that read "Keep Santa Fe Working."

Angela Merkert, director of Faith at Work, a nonprofit that is serving as the umbrella for the pro-tax coalition, called the plan "a courageous leadership position."

"It's important for us to be thinking about taking care of the common good," she said.

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