DESERT HOT SPRINGS, Calif. -

Tax revenue could be the answer to stabilize the budget in Desert Hot Springs.  The city declared a fiscal emergency in November and it's fought an uphill battle since.  The city made deep cuts and continues to deal with a lawsuit because of it. A fact-finding report was released Monday about the ongoing litigation between the city and the Police Officers' Association.

"Fact finding is where you get both sides together so you can find some common ground," said Mayor Adam Sanchez.  

The common ground is that Desert Hot Springs needs to do what it can to keep its police department, at least according to the report. It's to address the lawsuit filed by the Desert Hot Springs police officers' association against the city.  

The suit is over the average 40% salary cuts taken by officers during the fiscal emergency. The report calls for the POA to accept the cuts while the city takes the necessary steps to find revenue to keep them, rather than contract with the sheriff's department.  One of those steps is a special tax to fund law enforcement.  

If the council puts a specific tax on the November ballot, the union says the lawsuit could go away.  

"Put it on hold and not proceed with it for now and accept the existing cuts, until we can get a funding measure on the ballot," said Wendell Phillips, the lawyer for the DHSPOA. 

A solution Phillips said he offered, but the city's attorney, Laura Kalty says otherwise.  Kalty sent us this statement:

"The fact-finding report is important in that it confirms the propriety of the actions taken by the City based on the fiscal emergency declared in November 2013. Since that time, the POA has pursued both a preliminary injunction and fact-finding to oppose the cuts, and both the superior court and now the fact-finding panel have found that the City’s actions were necessary in light of the fiscal emergency – rejecting the POA’s arguments. This is particularly significant because the fact-finding panel includes a member appointed by the POA, and Mr. Royds also agreed that the POA should accept the cuts imposed, and stop fighting the City on this matter. To this day, the POA continues to pursue litigation against the City, rather than work with the City on a solution to the obvious financial difficulties."

The report offers another solution, close the year-and-a-half old Health and Wellness center, calling it a "fiscal drain" on the city's budget.  Sanchez said that's off the table because of a new partnership.  

"Borrego Community Foundation has stepped up," said Sanchez.  "They are now going to move forward with the Desert Healthcare District, and they're going to be able to offset those costs to us now." 

Even with the help, the city still needs to find $1.7 million in the new fiscal year.  No matter what becomes of the lawsuit, it's clear the city needs to find more revenue not only to fund law enforcement, but to avoid bankruptcy and remain a city.

"We need to have it, especially if we're going to move forward and pay for our policing services in the city of Desert Hot Springs," said Sanchez. 

The council must make a decision on whether or not to put a tax on the November ballot, by August 5.