MECHANIC FALLS  — Town councilors Monday night approved a plan for dealing with the $120,000 revenue shortfall in this year’s town budget.

The shortfall, announced at the council’s Jan. 4 meeting, was the result of a poor return on the interest on town accounts, which came in $28,700 under expectations, and news in December that Mechanic Fall’s state revenue sharing allotment had been cut to $308,000. That is down from the earlier budgeted $400,000.

Town Manager John Hawley told councilors that he and town treasurer Lisa Prevost did their best, combing every line for any amount that could be used to make up for the deficit.

“We were only able to come up with $75,700; not enough to take us all the way but it does leave us less than $45,000 in the hole,” Hawley said.

The biggest chunk comes from the $34,400 that the town will receive from harvesting trees from part of the town forest near the transfer station. That project and revenue wasn’t in the original budget. The rest comes in smaller chunks with a bright note sounded where motor vehicle excise tax receipt showed up a surprise $6,000 above projection.

“The council agreed to wait until April 1 before taking further action. We’re taking a gamble. If the winter turns mild we can make up the money in the winter roads budget,” Hawley said.

Hawley said that if the town can’t make up the $45,000 by April 1, the council will draw up an article for the May 19 town meeting, asking permission to draw the money from the town’s fund balance.

“Councilors made it clear they don’t want to put this on the backs of town employees for the third year in a row,” Hawley said.

In the past two years town employees have seen their raises cut from 4 percent to 2 percent in midyear, with furlough days on top of that, and then a year with no pay increases. Those moves kept the budgets intact and assured no property tax increases.

Hawley said he isn’t so sure about holding the line on taxes next year. He’s already projecting that revenues will fall another $260,000.