Auditors delivered the bad news to council members, the city of Gulfport is financially in dire straits.
The city's water and sewer fund is in debt, as is the general fund.
The general fund, which basically runs the city, will be 1.8 million dollars short as of July first.
This leaves council members to make some tough decisions.
"We're faced with the direct option of raising water/sewer rates, property tax or cutting expenditures. Now do we have the courage to do that? Cut expenditures? You're going to have to cut staff, you have to cut personnel, you have to cut some of the capital projects that we have in to be, so we have some tough decisions to make," said councilman Chuck Teston.
According to comptroller Mike Necaise, the audit points to two main problems.
First, the city of Gulfport borrowed more than 40 million dollars to fund water/sewer upgrades and expansions. As a result of that, the city's debt will rise from 4 million this year to 7 million dollars by 2006. The city will have to come up with that extra 3 million dollars.
The second issue, the city needs another 80-million dollars to fund additional water/sewer improvements and there's no money in the budget for that.
Council member Chuck Teston says this year's audit is almost a carbon copy of last year's. He says something has to be done.
"We have to have the courage to step up, look the citizens eyeball to eyeball, tell them the truth, and come up with a solution and stick with it. If it's to raise property tax, we must do it. If it's to raise water and sewer rates, we must do it. But we must look the citizens in the eye and tell them the truth and let them make the decision. If we make the wrong decision, voting time, they can vote us out," Teston said.
As city leaders look for answers to the financial woes, Councilman Teston hopes for some help from citizens. He's encouraging Gulfport residents to submit their own ideas to remedy the city's financial situation.