CASTLE ROCK — City officials say they need to cut about $250,000 from the current year budget rather than borrow from other city funds, as originally planned. Finding those cuts in a $1.3 million budget, though, is going to be painful and layoffs seem unavoidable.

“Cutting one or two (employees) isn’t going to get us too much money,” Councilman Earl Queen said at a council retreat Monday afternoon. “If we’re going to make cuts it’s going to be drastic.”

“Any cuts at this point is going to affect service,” Councilman Khembar Yund said. “There’s nowhere else to cut.”

The situation is so dire that the council voted 3 to 2 Monday night against paying $337 for county jail crew landscaping — even though that money doesn’t come from the 2009 general fund budget, the one that needs trimming.

“How can we spend $400 to $500 on this when we may have to lay people off soon,” asked Councilman Mike Mask during Monday night’s meeting. “That’s not only pathetic, that’s stupid.”

Mask, Queen and Jack Reilly voted against using the jail crew. Yund and Greg Marcil voted for the work before the town’s fair, parade and Mountain Mania events.

When it adopted the 2009 budget last year, the City Council planned to borrow $236,000 from other city funds to make up a budget shortfall. At the time they hoped the economy would improve within the year. In addition they hoped several housing and other business projects would be further along today and thus generating tax revenue for the city.

Since then, though, city council members have rethought the decision to borrow their way to a balanced budget. During recent meetings with state auditors, the city also was advised to avoid that plan if at all possible, Mayor Barbara Larsen said.

“From the time we did it, it didn’t sound like a good idea, but we had to balance the budget,” Larsen said of the borrowing plan.

In addition, officials said they’re not sure now that they could pay the money back if it was borrowed, Marcil said. By law, the borrowed money must be repaid within three years.

Deciding not to borrow is the easy part, though.

Now officials have to figure out what mix of cuts and rate or fee increases they can cobble together to make up the figure. They’re still working with estimates, but they figure it’s at least $250,000, perhaps $300,000 to give the city a little cushion, Marcil said.

“I asked the auditor how we’re supposed to keep up with the costs of inflation, and she said ‘you need to cut,’ “ Marcil said.

The city has 14 employees. Closing offices on Fridays as well as layoffs were mentioned as possibilities. Without getting into specifics, the council also discussed looking at increasing rates and fees.

The city already is asking voters to pass a $250,000 police levy for 2010. If that measure passes, the council would have some budgetary leeway. They’d know there was money coming in to repay a short-term loan, Yund said. Police Chief Bob Heuer also has applied for a federal economic stimulus grant to maintain police officers, but he warned it’s highly competitive.

Officials agreed they need to start planing for cuts now, though, before the Aug. 18 levy election or the awarding of grants in September. The council will meet Monday at 1 p.m. to discuss the matter and possible cuts further.

“We need to get on this now,” Yund said. “We can’t wait.”