AT A BUDGET hearing on Friday, October 29, the Portland City Council received, for a change, some good news about the city's finances.

After years of austerity—hiring freezes and millions in program cuts and rate hikes—Portland actually managed to close out its last budget year with $9.7 million left in the bank. And, just as shocking, no deep craters have opened in the current year's spending plan to swallow up the surplus.

"That page stands on the shoulders of actions taken by this council," Mayor Sam Adams said as he perused a handout, provided by the city's financial team, that broke down the city's unexpected largesse.

That means, for the first time in more than two years, commissioners will actually have some money to throw around. The last time the council had leftover cash, in Fall 2008, it was quickly eaten, and then some, by a $19 million deficit.

Final approval of how to spend this year's loot will come in a couple weeks. But the council is expected to lavish millions of dollars on infrastructure and maintenance projects—restoring some money that had been cut as part of this spring's budget fight. The council also is expected to hand the police and fire bureaus $1.5 million to help them deal with a wave of retirements looming this summer by ending current hiring freezes and bringing more employees on board sooner.

In addition, the council will likely add several hundred thousand dollars to the city's savings account while setting aside an additional $3.9 million to help augment the 2011-12 budget year that begins July 1.

But underlying any optimism, officials say, is uncertainty. For instance: Business license revenues, which have surpassed expectations, may fall back to Earth if unemployment remains high. And no one is expecting a boom any time soon.

"We are muddling along, slightly as expected," says the city's economist, Josh Harwood. "There's some good news and some bad news, but we're not breaking out."