The City of Sacramento says the six-year budget forecast is a mix of good and bad.
Sales tax and property tax revenues have increased and this year's budget proposal asks for staffing and funding increases for some departments.
But the city faces a $41 million deficit within five years. City Manager John Shirey says such a deficit would be comprised of unfunded public pension and retiree healthcare costs, and the loss of Measure U funding for city services in 2019.
"We shouldn't wait until '16, or '17 or even '19 and start thinking about this problem."
Shirey presented the positives for the budget for the next fiscal year, which starts in July. He says there will be no layoffs, there will be money for a reserve fund and more employees to tackle urban blight.
"What we want to do here is step up our efforts to deal with recalcitrant landowners who don't keep up their property, who make it bad for everybody in the neighborhood," he says.
The 2014-15 budget proposal calls for $1 million to be set aside for employee healthcare costs and $300,000 to pay for three people to address urban blight in Sacramento communities.
The police and fire departments will present their budgets to council May 27th.
The council will vote on the full budget June 10th.