VALPARAISO | The city's Redevelopment Commission plans to approve its 2009 budget in January, but a lot of uncertainties remain over the impact of the new property tax caps, which could contribute to a deficit of close to $1 million.

The commission's executive director, Stuart Summers, gave the group a kind of "worst-case scenario" look at the budget last week, showing a potential shortfall of $943,372. He also asked for the commission's help in deciding where the cuts should be made. The commission responded by recommending adjustments totaling about $1.1 million.

Summers said it isn't certain the tax caps, which will limit the property taxes on homes to 1.5 percent of the assessed value and 2.5 percent for commercial property in 2009, will reduce the amount the commission receives from its tax increment financing districts.

He had estimated a 20 percent reduction in revenue earlier this year, but he told the commission Thursday it could be anywhere from a 10 percent decrease to a modest increase.

The fate of the TIF replacement levy, which has been in effect since 2003 and raises about $300,000 a year, apparently will not affect next year's revenue.

Although the city won't receive the replacement levy under the new law, Summers said it appears the city will be able to collect the 2008 levy payable in 2009. The funds are used to buy police equipment.

Having that money reduces the deficit to $643,372, and the commission decided to defer the final engineering for the Calumet Avenue/Burlington Beach Road corridor, cut back on the planned sidewalk improvements along Calumet between Wall Street and Glendale Boulevard and eliminate the amenities planned for the roundabout to more than cover the remaining gap.

The Calumet/Burlington Beach engineering was estimated to cost $549,000 to design the widening to three lanes, drainage improvements and the addition of curbs, gutters and sidewalks from Bullseye Lake Road to the entrance of the proposed Memorial Hospital east of Ind. 49.

Summers said the commission has other potential revenue sources. The city still is negotiating with the Indiana Department of Transportation for a refund of up to $200,000 on the roundabout project, and it could earn about $400,000 from the sale of the property on either side of University Drive. If revenue drops by only 10 percent instead of the projected 20 percent, that will mean another $300,000, he said.