EVERETT — City officials thought they had cinched Everett’s belt tight after the economic meltdown.

Turns out, they’ll probably have to cinch it quite a bit more.

The city is projecting a $10 million shortfall in next year’s budget, Everett’s chief financial officer Debra Bryant told

the City Council on Wednesday night.

“It’s a big hill to climb,” she said.

Bryant stressed that the numbers are preliminary; a lot can change in the next few months.

She plans to come back to city leaders in July with an update once there’s a clearer picture of the city’s revenue. The budget won’t be approved until later this year.

Still, department heads are being told not to hire more employees and to expect no bumps in their budgets, even to cover any unexpected mandates. New programs are being discouraged unless the cost can be offset elsewhere.

In January, Mayor Ray Stephanson laid out some of the challenges the city faced in weathering the downturn in his state of the city address. Then, he seemed upbeat about Everett’s financial future.

Stephanson said he would still give the same speech now.

“It’s not unusual for the private sector to show some recovery well before we see it in the public sector,” the mayor said Thursday. “Even though we’ve heard some selective good news about job growth, by my estimation we’re 36 to 48 months from beginning to see improvement.”

Everett has at least a few more years of “very thoughtfully looking at every decision we make,” he said.

Everett has been cutting back on spending since 2008 when city staff first noticed revenues falling apart. As of last month, the city had not filled 32 positions.

The city projects $110 million in revenues and $121 million in expenditures for 2012. Those numbers are based on modeling of where the city is at now, plus first-quarter revenue results.

She describes those results as flat. The city pays for its basic operations mostly with revenue from sales tax, business-and-occupation tax and property tax.

The city also lost out on an extra $2 million this year in expected revenue because Boeing didn’t deliver the first 787s on time.

Meanwhile, running the city grows more expensive. That can be attributed to inflation and difficult-to-control costs, such as insurance premiums.

One safety net is the city maintains a reserve fund with just over $21 million. Stephanson said the city doesn’t plan to touch that next year.

About half of that anticipated $10 million gap is because the city temporarily stopped contributions in 2010 to police and firefighters pension and also postponed replacing some vehicles and now probably has to start paying for them again.

So far the city has avoided layoffs and furloughs.

Nothing is off the table if things don’t improve.

“All options are being considered,” he said.

Reporter Debra Smith: 425-339-3197 or dsmith@heraldnet.com.