He focused heavily on the state of the economy pointing out that while Durham is riding out the recession, the bull city is not immune to the economic downturn.
The city is seeing a 5.5 million dollar shortfall. City officials have already asked departments to cut their current budgets by 1 percent.
"We will have to do more with less; and our primary focus must be on the more efficient delivery of our core city services," Mayor Bell said.
Bell also highlighted the city's major accomplishments in 2008, including the debut of the new performing arts center.
He talked about the city's continued effort to reduce crime, go green, increase jobs, and improve transportation and infrastructure.
Slow downs in sales tax revenues and real estate transactions mean a $14.2 million funding gap for Durham County.
County Manager Mike Ruffin saved $9 million by freezing new hires and cutting spending. His plans include a 6 percent budget cut for all county departments and less county funding for Durham schools.
"I don't buy into the argument that it always has to come out of the classroom," Ruffin said. "They have some programs that are not working quite as well. They need to be tweaked, maybe reduced, maybe eliminated."
