The City Council will take a final vote in two weeks on a balanced, $2 billion operating budget that neither raises property tax rates nor fees and makes no cuts in services.

Last week, Mayor Kirk Caldwell and his Cabinet warned Council members they would likely need to raise bus fares or property taxes, or cut services, to deal with up to an estimated $67.5 million gap in the budget caused largely by the Council’s decision to reject a hike in the city fuel tax that would have raised an additional $15 million. Other increased costs were $10 million in grants-in-aid issued to nonprofits, and $37.5 million to pay for 4 percent salary and wage raises for the city’s employees.

The latest version, presented to the administration Monday afternoon by Council Budget Chairwoman Ann Kobayashi, creates a single, $70 million "salary provisional account" that allows the administration more flexibility in its funding for the impending pay raises. The money would come from accrued funding set aside for vacant positions, vacation for departing city employees and other salary needs.

It negates an earlier move by the Council to cut in half the accrued funding placed into individual departments’ budgets, a move that Caldwell and his lieutenants objected to strenuously. They argued that not only was money there to be used for anticipated pay increases, but that it also would give them the flexibility needed to conduct regular city business. Council members pointed out that previous administrations have never spent all the funding for vacant positions and instead used it as a "slush fund."

Under the new plan, while money can be drawn by the administration from the single account without any Council approvals, the administration would be required to provide a quarterly report on how the money is being spent, Kobayashi told the Star-Advertiser on Monday night.

The Council wants to be cooperative, and also recognized that a first-year mayor administration is trying to deal with new contracts for city employees, but also wants to keep track of the money, she said. "We’re trying to be both very collaborative and transparent."

Despite the compromise, Caldwell and his staff raised strong reservations Monday about another section of the revised budget.

About $20 million in the operating budget that the administration had earmarked for cash-funded capital improvements would be diverted for other purposes by paying for the CIP projects with bonds.