Oceanside Mayor Jim Wood wants to appoint a special blue-ribbon committee to make "some out-of-the-box suggestions" on dealing with the city's deteriorating financial condition.

Wood made the suggestion last week after an outside auditor warned in a report delivered to the City Council on Wednesday that in the past fiscal year the city spent $19.9 million more than it did the previous fiscal year, yet took in $19.6 million less.

To make up the difference, the city tapped into its reserves, and City Manager Peter Weiss warned that it would likely have to do the same this year.

Among all city operations, the city by the end of the 2008-09 fiscal year in June had $52.7 million in reserves in an overall budget of $356.2 million. About $120 million of the budget was for the general fund, which covers most day-to-day functions of city government.

The audit report concluded Oceanside was headed for trouble if it didn't reverse the trend of depleting its reserves, which are its savings, to cover ongoing operating expenses.

The mayor did not elaborate on his ideas, but said he would provide the council later with names of people who might serve on the commission.

"Certainly, we're here to provide services and that's the last thing we want to cut," Wood said as the council was adjourning Wednesday.

The mayor and his council ally, Councilwoman Esther Sanchez, didn't return phone calls Thursday or Friday seeking comment on the proposal.

Councilman Jack Feller, who is often at odds with Wood and Sanchez, said Thursday he will support the mayor's plan to form a blue-ribbon committee "providing it's intellectuals, not political appointments, reviewing the budget and the future of our finances."

"I think we're in a budget crisis, probably more than ever before, and I'm willing to listen to any and all suggestions on how to deal with it," Feller said. "I think we're better prepared than other cities but at this point, I think we've got some serious troubles."

Councilman Jerry Kern, who often sides with Feller on the council, said there's no need for a new committee because the city's Economic Development Commission could do what the mayor wants.

"Those are a sharp group of people. I don't know that we have to go out and find more. We have them already," Kern said. "I'm encouraged that he's (Wood) finally recognized that we have a problem."

Oceanside Chamber of Commerce President David Nydegger said city businesses leaders are willing to participate in a blue-ribbon committee.

"Anytime that the city wants to listen to the business community, we're happy to help them," Nydegger said. "Business folks have to worry about a lot of different things ---- bottom lines, payroll issues. Those are things that they could probably be a big help with."

Weiss said he'd welcome budget suggestions from a blue-ribbon citizens committee.

"It makes sense with something that's that important to have an independent body looking at things and being able to make recommendations," Weiss said.

If nothing else, Weiss said the committee could help the council determine what's important to city residents in deciding where to make more spending cuts, which Weiss said will probably be needed for the city to live within its means.

The committee could be "a sounding board for the community," Weiss said.

Under the city's policy for appointing ad hoc committees and commissions, the mayor would appoint the members of any blue-ribbon committee subject to City Council approval, Weiss said. He said there was talk last year of forming a blue-ribbon finance committee but the matter was dropped.

Since then, the city has gone through a series of spending cuts, including laying off 26 city workers in December.

Oceanside is in the process of hiring an efficiency consultant to review the operations of its water and sewer operations. A similar review was conducted last year of the city's Development Services Department, which includes building, planning and permitting functions. He said the study would cost $50,000 or less.

Kern, in a December memo to Weiss, suggested that the efficiency review be expanded to include other city operations.

"I'd like to see something like that citywide," Kern said. "Let's take a look at what we do, how we do it and can we do it better and cheaper without cutting services."

Once a consultant is chosen for the water and sewer review, Weiss said he will find out how much it would cost to include other departments and ask the council for direction on whether to go ahead with the broader study.

Call staff writer Ray Huard at 760-901-4062.