The biggest cut will take almost $2 million promised public housing -- money that advocates say was intended for some of the city's neediest residents. Duluth Housing Redevelopment Authority director Rick Ball says he was stunned by the council's action.
"We have an aging housing stock," Ball says. "We have many unmet needs at this point. We've been trying to meet the needs of affordable housing in the community, and this is really -- this is quite a shock for us."
Ball says the local money can generate several times as much in state and federal funds to build projects like moderate and low-income housing, a center for American Indian housing and rebuilding existing homes. He says the program has created jobs and generated new property taxes.
"It will more than pay back the original investment, so we certainly hope that it will be reconsidered," Ball says.
But some council members say public housing isn't a core service.
"The city is not really flush financially," says Jim Stauber, who voted to kill the housing Community Investment Trust program. "We really need to get down to what are the essential services. And I think most people would agree essential services are providing police protection, providing snow plowing, providing, you know, the utilities, and things like that."
With the housing market flush with homes for sale, Stauber says new housing is just not necessary right now.
"Why should the city taxpayer continue to fund these organizations that are building houses that they can't sell?" Stauber says.
The money is better spent on Duluth's notoriously bad streets and utilities, according to Council member Garry Krause.
"We're getting people that are consistently having their basements flooded to waist height with sewer waste," Krause says. "We're having streets that are falling apart, in really bad condition. So it's time that we have to start being responsible, and paring back, at least during these economic times, halting the trend of continual expansion."
And Duluth's city budget problems are as simple as supply and demand, according to council member Russ Stewart, one of four who voted to cut the housing fund.
"If you had an infinite amount of money you could do an infinite amount of good," Stewart says. "There's no limit to the good things that you could do including housing, and arts, and all those kinds of nice things. However, there is a limited amount of resources, especially in Duluth at this time."
The cuts rattled several cages. The Duluth Public Arts Commission stands to lose its budget. The commission directs a 1 percent fee on new construction projects for new art.
Commission President Dennis Lamkin says the commission is responsible for art works citywide, like a fountain and whimsical statues which are tourist attractions in the Canal Park district.
"The majority of the money gets used for the maintenance of all of the various pieces of public art that we have," Lamkin says.
Lamkin says a $39,000 a year budget helps maintain the art in place.
"The maintenance of those sculptures would fall to the city and would come out of public works," Lamkin says. "Or they would just be neglected, and deteriorate, and eventually disappear from the public's view, which would be a shame."
Next on the chopping block is transportation in the form of rapid rail passenger service planned between Duluth and Minneapolis.
The council rejected Duluth's portion of the budget for a joint powers board that's studying fast train service. Duluth's $40,000 share is about 10 percent of the board's budget.
Council member Jim Stauber says passenger rail didn't work in the 1960s, or in the 1980s, and probably won't work now.
But cutting the study is short sighted, according to rail promoter Ken Buehler, particularly in the era of high speed rail.
"At 110 miles an hour, and having a total of possibly eight trains moving within the corridor daily, that this actually becomes a project that at the end of the first year-and-a-half would actually return an operating profit," Buehler says.
A train feasibility study will be finished soon. With that in hand, Buehler plans to request the money again.
"We will be back before the council right after the feasibility study is complete, and it is scheduled to be done by the end of the year," Buehler says. "We will be talking to a slightly different city council."
That's what a lot of people are thinking. In January, the Duluth council turns over, replacing five of its nine members. Program leaders, from housing to arts to high speed rail, are counting on a more generous council getting seated in January.