LATHROP – With the 2011-12 fiscal year fast approaching, the question before the Lathrop City Council is simple.

What is the softest way to absorb a $615,000 shortfall without decimating programs, laying off personnel or raiding the city’s general fund reserves?

The city’s elected officials met with city staff Monday night during a special council budget review session to discuss the budget and figure out the best way to balance it. At the start of the meeting the council voted not to allow themselves to use reserve funds to cut the gap – relying instead on freeing up the money from the individual department budgets prepared and included in the preliminary document.

But coming to a consensus on how to best handle the situation wasn’t an easy task for the council.

Vice Mayor Christopher Mateo was extremely vocal about having city staff make recommendations about where the cuts should be made and then have those brought back for consideration and further discussion. That lead to a verbal exchange between him and Councilman Sonny Dhaliwal and Councilman Omar Ornelas who disagreed with the assessment.

And when it came to making the first big cut from the proposed budget – when the five-member body began to proceed through individual department budgets – it was Ornelas who suggested cutting $50,000 from a $100,000 contingency fund included in City Manager Cary Keaton’s budget.

When the idea surfaced, Keaton suggested taking the whole $100,000 – what would amount to more than 15 percent of what needed to be cut – and if anything came up he could petition the council for use of the reserve funds. Ornelas never amended the idea and the idea passed 3-2 with Mayor Joseph “Chaka” Santos and Mateo dissenting.

Even with the shortfall and the ensuing solution currently playing itself out, the City of Lathrop has built up enough reserves to weather the lean economic times that are crippling many other California cities.

The question, however, will be whether the council will be able to use that money to defer gutting the departments and the programs that are already operating at barebones levels due to cuts and layoffs that have already been made.

According to Lathrop’s five-year forecasting model, the $615,000 deficit currently being hammered out will grow to $897,000 the following year. By 2015 it will top $1 million, and reach nearly $1.2 million by 2016. If reserves were used to cover those deficits – waiting through the years where city financiers believe that sales and property tax would start to rebound – Lathrop would have just under $3 million in general fund reserves in 2016.

It would only take a majority vote of the council to allow use of general fund reserves to cover the gap – reversing the decision they made at the start of Monday’s meeting.

The budget talks will continue today at Lathrop City Hall, located at 390 Towne Centre Drive, beginning at 4 p.m.