Slow growth in the housing market has had a negative impact on Asheville’s budget this year, resulting in a $1.3 million deficit, city leaders said Monday.

However, City Council members said they would not raise taxes to make up for the shortfall.

Rather, council may try to save money in areas such as employee benefits, cracking down on tax deadbeats, and lowering staffing levels by not filling vacancies.

Council members dicsussed the budget at their annual retreat where they set goal for the coming year.

Councilwoman Holly Jones said that slow growth in property values and in sales-tax revenue are the main causes of the deficit, as well as rising employee costs.

Property values rose only 2.3 percent last year, the lowest rate in a decade. By comparison, property values jumped 5.5 percent the previous year.

Property taxes make up the bulk of the city’s income, along with sales taxes, which have also slowed. Sales-tax revenue for the coming fiscal year is projected to be below 5 percent.

However, Vice Mayor Jan Davis downplayed the projections, noting that revenues often surpass early estimates.

Mayor Terry Bellamy proposed saving money by shifting employee health care from a city-managed system to a private firm.

Bellamy noted that the city’s biggest expense is employee wages, salaries and fringe benefits. That includes $801,000 allocated for hiring 30 new employees this year and next fiscal year. The new hires include city planners and police.

She also suggested increasing tax-collection rates, financing security improvements at city recreation facilities to spread out costs, and seeing if the city’s state-funded street repair fund would be increased because of new roads.

Councilman Carl Mumpower blamed city regulations for necessitating increased staff in the planning department and urged the city to not fill vacancies.