As Sacramento gears up to face a $16.5 million budget gap in the next fiscal year, consultants from Colorado met with City Council members to outline a new approach to budgeting that focuses less on dollar amounts and more on top city priorities.

The council budget workshop held Tuesday at the main branch of the Sacramento Public Library was designed to help council members refine fiscal priorities for the city and discuss ways to reshape the budget process.

Significant cuts to resolve a $39 million budget gap last year resulted in layoffs from the police force and rolling brownouts at city fire stations – actions that brought weeks of public outcry at City Council meetings.

The city charter requires the city manager to present a proposed budget to the City Council by May 1 for the upcoming fiscal year, which begins July 1. The deadline for a finalized budget is June 30.

Budget consultants Jon Johnson and Chris Fabian were brought in by the city’s Finance Department to introduce details of “priority-based budgeting” – a method that focuses on matching funding decisions to predetermined city priorities, instead of on prior years’ spending patterns.

City Manager John Shirey said Sacramento, like many local governments throughout the nation, typically rely on such “spending-based budgeting” – that is, making spending and cutting decisions based on how much was spent last year with last year’s revenue levels.

The result, Shirey said, is recurring budget gaps and employee layoffs.

Fabian said the key to priority-based budgeting is having clearly defined priorities.

“Across the board reductions is egalitarian – there is a sense of fairness about it,” Fabian told council members, “but it doesn’t reflect priorities.”

In one budget exercise at the workshop, council members ranked providing a safe community, economic vitality and youth and education as top priorities.

In a detailed staff report presented to council members, 16 city departments – including Community Development, Parks and Recreation, Transportation, Utilities and others – were reviewed to sort programs and services into “mandated,” “essential” and “existing” categories.

As council moves through the budget process, Shirey said, the reviews will be part of the criteria to determine how city resources should be distributed across city programs.

“We have a lot of work to do,” Shirey told council members. “You’ve given us some direction on the focus areas that are important to you. Now we need to go back and apply it.”

The workshop was designed as a starting point for discussion for City Council members as they approach the 2012/13 budget year.

“We definitely need more time to dig into this information,” City Councilman Darrell Fong said Tuesday. “I get it – now I want to look at it closer.”

City spokeswoman Amy Williams said the City Council generally holds one workshop prior to developing the budget, but more could be scheduled if the council feels it’s needed.

Although the council does not make final budget decisions at workshops, the meetings are an opportunity for council members to work with and give direction to staff and the city manager as he begins to prepare the annual budget.

Melissa Corker is a staff reporter with The Sacramento Press. Follow her on Twitter @MelissaCorker.