A cautious Costa Mesa council is urging that the city not spend all of a $7.1-million budget surplus and instead shore up its reserves.

Three of the five council members met Tuesday — Mayor Jim Righeimer and Councilman Gary Monahan were absent — in a short study session to discuss the city's extra cash from the 2012-13 fiscal year, which ended in June.

City staff presented a series of project proposals that added up to $7.1 million, the largest being $1.6 million worth of various improvements to the council chambers.

Other ideas included 10 new police vehicles, for an estimated cost of $320,000, and the setting aside of $500,000 toward the city's unfunded pension liability.

"We're not looking for any major decisions tonight," said city CEO Tom Hatch. "We're looking for some general feedback and comments about this concept."

Councilwoman Sandy Genis urged looking further into the financial future and being careful with spending.

"All these things are good things," she said, "but at the same time, I think we really need to look at long-term financial planning, as opposed to just, 'How do we spend some money that we found in the sofa cushion?'"

Genis also said she was dismayed by the idea of spending the extra $7.1 million after "what we've been hearing for the last several years" about the unfunded pension liability and having to dip into city reserves.

She compared the scenario to living off a credit card.

"You're carrying a huge balance on your charge card ... and then you get some extra money and then you decide whether you're gonna buy a boat or have cosmetic surgery," Genis said.

Mayor Pro Tem Steve Mensinger also urged prudence.

"I don't really disagree with any of the costs," Mensinger said. "I want to leave it with: I think we just need to be very cautious, and I have a lot of faith in [Hatch's] ability to maneuver through that process."

Mensinger added that the city relies heavily on its sales tax revenue, which is a "highly sensitive" and volatile source of income. He added that he liked the idea of improving sidewalks and the council chambers.

Councilwoman Wendy Leece added she thought it was time "that we have some kind of a plan, as far as how we're gonna replenish the reserves and to what percentage."

She also urged the creation of a plan to tackle the pension liability using recommendations from the Pension Oversight Committee. The nine-member committee, with two council liaisons, began its investigation in May.

"We need their recommendation soon," Leece said.

Hatch estimated that in 2007, after decades of saving, the city had about $70 million in reserves, $33 million of which was spent in the three or four years during and after the Great Recession.

City staff wrote that the surplus came from various sources, such as an extra $1.5 million worth of extra sales taxes and $1.7 million in property taxes. An additional $3.7 million was achieved through savings on expenses and salaries.