Looking between a projected budget shortfall of nearly $400,000 and hopes of keeping the tax rate flat this year, at least one selectman is keeping the possibility of layoffs on the table.

Gov. John Lynch may have backed away from a budget proposal that would have cut state funding to Salem by as much as $1.7 million, but reductions in the level of funding from Concord for retired firefighters and police officers continues to be a concern for local officials as they look toward setting the town’s tax rate in October.

While about $1.3 million has been restored to the town in state funding in the form of a portion of the rooms and meals tax, officials are still trying to find ways to make up the difference. Since learning about the potential shortfall, the town has maintained a hiring freeze, according to Town Manager Jonathan Sistare.

The move has kept four vacant positions open and freed up $317,292 that would otherwise go toward salaries and benefits, but that still leaves the town with an unanticipated shortfall of roughly $100,000 and puts into doubt whether a commitment made by officials to keep the town’s tax rate flat this year is still a possibility.

“My main thing is find that $100,000 and we don’t want to do layoffs, but if we have to look at it, we have to look at it,” said Selectman Patrick Hargreaves.

Though Hargreaves would rather see the town cut hours or minimize the amount of overtime pay – by hiring more parttime town employees without benefits – layoffs in the future remain a possibility.

“If we don’t cut our overtime and if we don’t come up with the shortfall, then we have to look at layoffs,” he said. “It’s a last resort.”

The shortfall also prompted board Chairman Arthur Barnes to call on the town manager to review the current staff level and evaluate the importance of the four open positions to determine whether cuts should be made elsewhere to support new hiring.

“Maybe some of the full-time positions need to become part time so we can staff where we need to staff,” Barnes said. In the meantime, officials are also turning to stimulus funds as a way to make up for the missing funds or offset anticipated expenses. About $130,000 in funds have been made available to the town in the form of a grant for energy-efficient improvements around Salem, according to Sistare.

Officials are hoping potential stimulus money will fully finance the cost of one of two bridges in town slated for reconstruction this year, Sistare said.

Selectmen are also considering applying for a program that would support the hiring of three new police officers for three years, with the stipulation that the town retain those officers for one full year after the funding runs out.