With barely $60,000 in reserves, Cloverdale needs to get its fiscal house in order, newly named Mayor Joe Palla says.

In the coming year, he said the top priority should be the city's budget.

"We need basically to look at a long-term plan. We are pretty much living year to year. We need to look at a two- to five-year window," he said.

Cloverdale's $4.9 million general fund is supposed to have a reserve of 25 percent, or about $1.2 million, according to city guidelines.

But for a number of years, there has been virtually no cushion. And with a $1 million general fund deficit predicted in five years, Palla said something needs to be done.

City staff, now at 39 employees, has been trimmed by 25 percent in the past five years.

"We're down to a skeleton crew," he said.

While there has been previous talk of increasing revenues with a possible sales tax increase, or reinstituting a city utility user's tax, Palla is not pressing for a tax hike.

Instead he wants to take a broad look, probably in a series of public workshops, at ways to decrease expenditures or increase revenues.

"It's important to include the community as best we can. There's a lot they can bring to the table we may not be aware of, or thinking about," he said.

There may be grant funds that could plug some gaps, he said.

Like other cities, Cloverdale has seen a decline in property tax revenues, down about 20 percent from five years ago. Sales tax revenues also dipped and although they rebounded slightly the past couple of years, they now are only at the same level as 2007, according to data presented in October to the City Council.

"We have been struggling economically trying to attract business," Palla said, adding it will be even more of a challenge with redevelopment programs eliminated by the state.

He said the loss of those funds is a blow to the city's ability to redevelop the Thyme Square property near the Citrus Fairgrounds.

"We envisioned it as a kick start to economic development in the downtown core," he said, but now the outcome for the property is uncertain.

Overall, the city must come up with a strategy to bring new jobs into Cloverdale that pay a "living wage," he said.

Palla, 63, a retired police chief, was chosen mayor Wednesday by his colleagues in the annual rotation for the titular head of the city. First elected to the council in 2006, it will be his second term as mayor.

Carol Russell, a retired businesswoman, was selected vice mayor.

(You can reach Staff Writer Clark Mason at 521-5214 or clark.mason@pressdemocrat.com)