IOWA CITY - As Iowa City looks for ways to trim a quarter million dollars from its budget, the city approves a major remodeling of the city attorney's office.

Iowa City set aside $225,000 to pay for this improvement project a year and a half ago.

But that's when it had money to spare.

Now the city is considering laying-off people just to balance the budget.

Dust flies at City Hall to make way for a new and improved city attorney's office.

"It's a pretty full building but if there are things that we can do to use the space better we need to do that," said Regenia Bailey, Mayor of Iowa City.

Finance director Kevin O'Malley said the project will "improve efficiencies of the library, old cable tv room, and new office for mayors."

The remodel means more space for employees currently working out of old storage closets and installing a handicap accessible ramp.

"That's significant," said Mayor Bailey.

The city set aside the money for the project in October 2007, when it was trying to get rid of some cash.

The city said it had too much.

Now, it's stretched thin forcing the council to cut 250-thousand dollars in operating costs each year, for the next few years.

O'Malley tells TV Nine the city council has to "either raise revenue or cut staff or a combination of both."

Despite this the city council recently approved work to start the 130 thousand dollar remodel project.

"The impact quite honestly in a budget of our size, $200 thousand, while that's a lot of money, that's not significant," said Mayor Bailey.

Still some citizens tell TV Nine they don't understand why the city's investing in this project when there are so many demands for such little money.

We're told the council could have delayed the project and redirected the money back into to the general fund, but it didn't.

Council members argue spending this money is part of planning for the future.

"We need to make sure some projects prudently go ahead," said Mayor Bailey.

Council member Mike Write told TV Nine that he believes the city council made the right decision to authorize the remodeling project, even if the public objects as it was good, long-term investment.

If the project doesn't cost the entire allocated sum of $225,000, all left-over cash will go back into the city's general fund.