Walnut Creek is looking at approximately a $20 million shortfall for the next two years to balance a total budget of $116 million.
Layoffs are unavoidable; 25-30 staffers could lose their jobs and everything from police services to arts programs could be cut as revenues plunge to levels not seen since 1999.
"Our largest source of revenue has been sales tax and with the crash of the economy that's gone down dramatically," City Manager Gary Pokorny said.
Lagging sales at local car dealerships have hurt the most, as have plunging property tax revenues, as many homes here have been reassessed.
Besides declining revenues, some argue Walnut Creek is having trouble now because it overextended itself in better times. Some point to the city's new $40 million library as a luxury the city can no longer afford.
"Many of our fiscal ills are because it was oversized, it was very expensive and it has not been fully-funded," resident Hardy Miller said.
And then there are Walnut Creek's obligations to ex-employees. The Contra Costa Taxpayers' Association compiled a list of retirees who collect expensive pensions.
"They have 14 members of the $100,000 pension club, the people who get $100,000 or more for pensions, and that is of course is a drag on any governmental entity," spokesperson Kris Hunt said.
"We cannot sustain in California the retirement system as it's currently structured; I think it's especially problematic with the public safety system," Pokorny said.
The City Council will draft a budget next week; final adoption is set for June.