Santa Rosa's fiscal health reflects economic conditions in the city. With upbeat reports on employment and housing, there's reason to believe the economy is gaining steam. But the recovery won't reach City Hall right away, so finances will be a struggle for the City Council formed by Tuesday's election.

City Manager Kathy Millison outlined some of the challenges ahead in her budget presentation last spring. They include:

; Addressing a structural deficit, which is presently masked by a temporary sales tax.

; Meeting voter-mandated spending levels for public safety.

; Securing permanent pay and benefit concessions from city employees.

That's an ambitious agenda for any council. With its recent history of factional squabbles and 4-3 votes along ideological lines, the challenge may be even more formidable for Santa Rosa's council.

For the past two years, control of the council has rested with the members most closely aligned with business interests. On their watch, the city eased some of the regulatory obstacles for starting a new business. The city also negotiated $2.3 million in wage reductions and concessions from non-public safety employees.

But labor agreements with police and fire personnel missed the mark, with the council offsetting any savings on retirement benefits with pay raises.

The council's other faction is aligned with neighborhood groups, environmentalists and labor. Despite those union ties, it was this group that called for more concessions from public safety employees.

Looking ahead, the next council will benefit from state pension reforms requiring public employees to pick up half of their normal retirement costs. Savings will come sooner if the council uses its new leverage in bargaining with employees.

The council also must address the rising cost of public safety agencies, which now account for 59 percent of general fund spending, chewing up money that once paid for street lights and other programs. To that end, the council should revisit Measure O, which doesn't generate enough sales tax revenue to support the level of spending it mandates for police and fire.

Finally, council members need to prepare for the expiration of Measure P, a sales tax that hides a structural imbalance between the city's revenue and expenditures.

Four of the seven City Council seats are up for grabs in Tuesday's election. One incumbent from each faction is on the ballot: Mayor Ernesto Olivares (business) and Councilman Gary Wysocky (neighborhoods).

But this year's contest hasn't followed the script for Santa Rosa politics — the campaigns are unusually calm, and the divisions aren't as clear.

One reason may be the reciprocal endorsements offered by Olivares and Erin Carlstrom, an attorney with ties to the neighborhood faction. Among the other active candidates, Julie Combs and Caroline Ba?elos have support from neighborhood groups, and Don Taylor and Hans Dippel are running on business platforms.

It's likely that the election will produce another 4-3 split, but the odds of meeting the city's challenges will improve greatly if council members manage to retire the old factions and establish new alliances.