Money — including a status report on the city’s biennial budget and a proposal to put a limit on mayor and city council campaign donations — was the main topic of conversation at Tuesday night’s Edmonds City Council meeting,

In a brief presentation to the council, Mayor Gary Haakenson noted that the city is midway through its two-year budget prepared in late 2008. He encouraged the council to allocate time during its upcoming February retreat for developing creative solutions for the city’s dire long-term budget outlook: Due to declining property tax revenues and building permit fees, Edmonds will be in deficit spending mode by 2013.

“We clearly need more non-property tax revenue flowing into the general fund,” Haakenson said. The city is “in good shape” for the remainder of 2010 and into 2011, thanks to a cash infusion from the fire department sale to Snohomish County Fire District No. 1, the mayor said. But “in 2012, we are back in the same place.”

Haakenson noted that the council took a major step toward addressing the revenue issue by appointing the Edmonds Citizens Economic Development Commission, a 17-member body formed in 2009 to determine new strategies for economic development in Edmonds. The commission, which issued its first annual report Jan. 19, called for “strong and steady” council leadership to guide the city toward economic success.

Two major issues that challenged the city last year — the threatened closure of Yost Pool, a popular summertime hangout, and required employee furlough days — are gone for 2010, the mayor said. Yost Pool is fully funded, and there will be no need for employees to take unpaid days off. The city also will also be able to hire seasonal parks department maintenance workers. But since labor costs will be a significant portion of the city’s expenses in the coming years, he urged the council to determine a strategy for labor negotiations with the various unions representing city employees.

In other action, Council President Steve Bernheim’s proposal to place a $750 limit on cash and in-kind contributions to city council and mayoral races drew a wide range of opinions from fellow councilmembers.

Under the ordinance, violating the donation limit would be a third-degree misdemeanor enforceable by the Edmonds Police Department. Bernheim said that since candidates are required to file campaign spending reports with the state Public Disclosure Commission — and those reports are routinely monitored by Edmonds citizens who presumably would bring those violations to the attention of local police — there would be no costs associated with enforcing the ordinance.

Councilmember D.J. Wilson suggested that enforcement of the limit could be a problem, and wondered why the city wouldn’t instead have candidates abide by the PDC’s current donation limit of $850.

Councilmember Adrienne Fraley-Monillas, meanwhile, stated that the proposal “seems like smoke and mirrors” since it doesn’t cap the total amount of donations, meaning that wealthy candidates could self-fund their campaigns.

Councilmember Strom Peterson said he agreed with that sentiment, noting that “the more we limit the size of a donation, the more power an individual has to buy an election.”

Bernheim, an attorney in Edmonds, said that capping the total donation amount would be unconstitutional. Also unconstitutional, according to last week’s much-publicized U.S. Supreme Court ruling, would be limits on corporate or union donations to any local candidates, although most councilmembers agreed that city races would be unlikely to attract that kind of donor base.

The city’s newest councilmember, Diane Buckshnis, said that candidates wouldn’t need to worry about donation limits if they ran a grassroots campaign that involved a large number of supporters each giving small amounts of money, such as she did in her race last fall.

The discussion ended when Councilmember Michael Plunkett made a motion — approved unanimously — directing Bernheim to come back to the council in the near future with a motion for the council to consider.