"My fear is the estimates we made for this year that we are currently in could very well be off," said City Manager Jim Starbird. "We may have to come back to the budget drawing board and talk about what we need to do this year to keep it balanced."
Beyond this year's budget, the City Council may have to wrangle with a shortfall of about $8 million for next year's General Fund, which pays for basic public services like parks and public safety.
It would be the fourth year in a row that the City Council is forced to fill a significant budget gap.
In recent years, more than 100 city positions have been slashed, and dozens more have been kept vacant in an ongoing hiring freeze.
City officials have also negotiated millions in concessions from employee unions. After reaching impasse with the city's largest employee union for the first time in decades, the City Council last week voted to impose a 1.5% salary reduction.
And funds for future capital improvements, such as park renovations and road repairs, have been hammered.
"We've pulled all the rabbits out of the hat, and now we're down to the hat," Starbird said.
Much of the projected shortfall stems from a significant increase in payments Glendale will have to make to the California Public Employees Retirement System.
Officials said they expect to pay at least $5 million more next year on top of the more than $22 million the city currently pays into the state pension system.
The increase is fueled by the state system's major investment losses in recent years, and the increases in benefits and salaries that the City Council approved during a stock market boom that meant little or no contribution to CalPERS.
"We knew the rates were going to go up," Finance Director Bob Eliot said Monday. "They are just higher than we anticipated."
City officials this year worked to secure agreements with some of the city's employee unions to reduce pension benefits for new employees.
But those deals will not help the city meet the current skyrocketing obligations, which Eliot said was the "biggest single issue" the city is facing for next year's budget talks.
"Our costs are going up," he said. "We had a tough year last year, and it's going to be a tough couple more years."