After the first of the year, daily life is about to change in Northern California as local governments are forced to deal with the effects of the economic downturn, likely by cutting staff, salaries or services.

Sacramento, Placer, El Dorado and Yolo counties already are reeling from revenue shortfalls and nervously watching the state – their largest source of funding – grapple with its own money problems.

Of the 19 cities in the four counties, more than half already project budget shortfalls for the current fiscal year that will grow next year. Others are waiting until the end of this month – after the first property tax bills come due and sales tax figures come in – to acknowledge what others already suspect: The sky is falling.

"Localities are going to have to cut services. They're going to have to make adjustments to the budgets they passed six months ago," said Megan Taylor, spokeswoman for the League of California Cities. "Residents will see changes. It may be the parks are not maintained as frequently. It may be the library has hours cut. It may be the streets are not swept as often."

Tumultuous months are ahead, according to a Bee survey of the region's cities and counties.

Eleven cities are projecting a median budget shortfall of 3 percent in their general funds this year. While that might not sound like much, for a city like Woodland that translates to $1.3 million.

That comes on top of cuts and reserve spending many municipalities resorted to last spring in order to pass what at the time was a balanced budget.

"The economic downturn is going right to the heart of sales tax and property tax," said Russell Fehr, Sacramento city treasurer.

Those are the two biggest sources of money for cities' general funds – the part of the budget paying for most services.

After years of double-digit percentage growth in property tax revenue in the development boom, local governments are living with the aftermath of the housing crash and minimal growth. Some have seen their property tax revenue decline.

That impact appeared in the spring for cities like Sacramento. Facing sluggish revenue to deal with cost increases, the city made almost $29 million in cuts and used $23 million in reserves to balance its $423.9 million general fund budget.

By comparison, Colfax cut $300,000 to balance its $1.4 million general fund budget.

The new fiscal year began July 1. In the past five months, the economy has fallen even more sharply, not just on Wall Street but locally, where car dealerships and big-box stores – major sales tax generators – have closed.

Finance officials say they won't know the full impact of the downturn until later this month, when they get sales tax receipts for July, August and September. Early indications suggest that it won't be pretty.

"I think that's the quarter where the reality of the economic downturn really hit home for people," Fehr said.

Flat sales tax growth had been projected for Sacramento when the council passed the budget in the spring, but officials now anticipate at least 5 percent less than last year, he said.

Tightening the belt

Cities already have taken steps to cut expenses as they've watched budget projections they thought were conservative in the spring turn out to be wildly optimistic.

Almost all of the cities in the region have instituted a hiring freeze, put a halt on spending for travel and conferences, and cut unfilled positions.

The city of Sacramento required non-union employees to take unpaid days off – a so-called "furlough" – to save money, and is considering offering buyouts to all of its employees. West Sacramento asked all City Hall employees to voluntarily take off the time between Christmas and New Year's as an unpaid holiday.

"Any money they save is likely to prolong their jobs and that of their colleagues," said West Sacramento City Manager Toby Ross.

While municipalities have in large part been able to restrain spending through small, internal trims and budgetary sleight of hand, tough decisions loom. Governments throughout the region will begin a midyear budget review in January or February.

Call The Bee's Robert Lewis, (916) 321-1061.