Windsor's budget is balanced and in relatively good shape.

That's the modest assessment that emerges as the town begins its biennial exercise of adopting a two-year budget.

A prudent approach has helped the town endure "the deepest and longest recession since the Great Depression," said Heather Ippoliti, administrative services director.

While some neighboring cities and the state continue to struggle with structural deficits and depleted reserves, she said Windsor has maintained annual spending without depleting its reserves.

With general fund expenditures budgeted at $14.9 million for the coming fiscal year, the town still will have a $7.1 million fund balance remaining.

That's well beyond the town guideline of having reserves that are at least 25 percent of general fund expenditures.

"Overall we feel that our outlook is headed in a stable direction, and we're not taking any risks with the budget before you," City Manager Linda Kelly told the Town Council last week.

The council is scheduled to adopt the 2013-15 budget at its June 5 meeting.

Windsor officials have said previously that a factor in the town's strong fiscal position is the relatively low cost of police and fire services. The town contracts for police services with the Sonoma County Sheriff's Department, so police costs account for only 42 percent of general fund expenditures, lower than most cities.

The Town also does not have to fund a fire department, but relies on the independently established Windsor Fire Protection District for service.

Windsor's general fund did get some one-time revenues this fiscal year, including $1.2 million from the redistribution of property taxes that resulted from the state dissolution of redevelopment programs.

Town officials are proposing $13.4 million in expenditures in a separate capital improvement program over the next two years. They include upgrades to the Town Green, library, community center, senior center, a half-dozen parks, and bike and pedestrian improvements at Old Redwood Highway and Lakewood Drive.

There also is $2.2 million for street resurfacing, and $5.4 million for water and water-reclamation projects.

Town Council members did not object to those expenditures but questioned whether to spend $435,000 for a general plan update, and $45,000 for a study to determine the feasibility of a downtown hotel.

Although the town has made it through the challenges of the past few years, City Manager Kelly said the general fund is still not at pre-recession or optimal levels.

"We're starting to see signs of a recovery. But a full recovery will be slow and take many years," Ippoliti added.