After weeks of speculation on impact of the faltering economy on the town, the Windham councilors this week received a grim update on the measures necessary to create a balanced budget, some of which may include layoffs and the loss of services.

“It is the worst of both worlds,” Town Manager Tony Plante said Tuesday. “We’re talking about peoples’ taxes going up and getting less for it.”

Other towns are projecting budget shortfalls in the current fiscal year and are taking actions to close the gap. Excise tax revenue from residents registering cars is down, several town managers said, as is interest from investments.

In Naples, Town Manager Derik Goodine is expecting a shortfall of $130,000 in the current year’s $2.32 million budget. In response, he has issued a spending freeze on all non-essential items.

Standish has taken a similar tack as town officials foresee a $150,000 budget gap in the current $7.16 million budget. A personnel committee is reviewing all positions to see what savings can be found, Town Manager Gordon Billington said.

Actions taken late last year in Windham, such as freezing spending and utilizing carryover funds, have prevented a deficit in the current budget. But those were largely one-time measures that cannot be used in the next fiscal year, Plante said.

Plante told councilors the town was projecting a drop in revenue for fiscal year 2009-10 of around $1 million in its roughly $15 million budget, largely due to an anticipated decrease in excise tax revenue, state revenue sharing and interest on town accounts. At the same time, costs are expected to rise around $500,000 from increases in employee compensation and other operating costs.

Plante’s projections also include a $275,000 increase in property tax revenue, the most allowed under the property tax levy limit imposed by the state. He also asked the councilors to consider whether it would be appropriate to ask residents to exceed the limit.

Though no decisions have been made, Plante said, the budget gap of this size would not be closed easily and without pain. Positions in the town staff will likely have to be eliminated, and fees likely raised.

“It’s not going to be $5 here, $10 here,” he told the council.

Plante’s recommendations, formulated from discussions with department heads on how to cut 10 percent from the budget, include the reduction by about $503,000 of employee compensation, equal to roughly eight to 12 full-time positions.

Cuts would likely be spread between reductions in full-time, part-time and seasonal employees, unpaid days off or position cuts, some of which are vacant, he said.

Last month, after department heads made their recommendations to Plante, the town manager said staff cuts would necessarily mean a reduction in services.

“Either there are going to be fewer people doing things or people doing things for fewer hours. There will be some projects that can’t be done,” he said.

On Tuesday, Plante used the example of cuts to the public works department to illustrate the impact of staffing cuts, saying jobs like cemetery maintenance would suffer.

“They’ll get to the cemeteries when they get to them,” he told councilors.

The plan also includes $493,000 in reduced non-wage related operating costs, such as fuel, and $485,000 in reduced capital investment, meaning infrastructure projects would be delayed when possible.

“Nothing that is going to be done to get this budget in balance is going to be a popular choice,” Councilor Blaine Davis said Tuesday.

Councilors agreed that any staffing cuts should be spread around in order to lessen the blow to any one group of employees, both union and non-union. The town just signed a contract with the paramedics union, and is in or will soon be in negotiations with two other unions. Pay freezes will be a topic of discussion with the unions, Plante said.

Windham councilors promised an all-encompassing review as they look to make the town more efficient as a way to cut costs.

Donna Chapman wondered if the town could go to a four-day work week, while Liz Wisecup suggested town employees be given the opportunity to approve a pay freeze in order to save positions.

Plante outlined the tough decisions the council has to make in the area of capital investments and infrastructure improvements, as well.

If new vehicles are not purchased or roads rebuilt on scheduled, the costs of those items could be greater in the future. The council has to weigh that against the cost to residents of rising taxes, he said. Windham did put off purchases and repairs during the recession of the early 1990s, and is still trying to catch up, Plante said.

“The decisions were the best decisions that the people in office at the time could make, but they had consequences and we are still dealing with them today,” he said.

One problem with budgeting during this crisis is the uncertainty, Plante said. Less drastic efforts could be used if the end of the financial issues was in sight, but it is hard to tell when the current recession will end, he said.

“I don’t think anybody has those answers yet. We don’t know what this looks like on the other side,” Plante said.