By design, the federal stimulus violated a basic rule of budgeting: Don’t fund operating expenses with one-time revenue. Now that the one-time revenue is running out, Manchester, like many other municipalities and states, has to figure out how to fund dozens of positions previously financed by short-term federal money. Right now, it would appear that tax increases are coming.

Ten Manchester police officers are funded with a stimulus grant. It runs out next year. The city cannot let the officers go because to get the grant, it had to agree to keep them employed for a year after the federal money expired. Mayor Ted Gatsas pegs that cost at $490,000, which will have to be borne by the taxpayers.

The city also had 33 teachers funded with stimulus money. That money has run out already. The city replaced it with $1.9 million in surplus from this year and $1.6 million from another federal grant distributed by the state. That money will last through next year’s budget. Then what?

Gatsas says this is another reason why it is so important for the unions to agree to make adjustments to their compensation packages. In addition to the automatic cost increases built into union contracts (COLA and step increases) and the rise in health care costs, the city is set to lose millions in federal funding. The combination of rising costs and falling revenues (in addition to the revenue decline caused by the struggling economy) makes it impossible for the city to keep its current complement of employees without massive tax increases. And the public is in no mood to pay higher taxes, especially in Manchester, where tax hikes have become an almost yearly occurrence.

As it stands, the revenue to continue funding those 43 positions is not coming in, the unions won’t agree to concessions, and the aldermen don’t like Mayor Gatsas’ plans to save money. Aldermen prefer to wait and see if the economy recovers. If it doesn’t, hello big tax hikes.