PHOENIX (3TV/CBS 5) – A month ago, the City of Phoenix had a projected budget surplus of about $28 million. Today, the City's leadership will be meeting to try to find solutions for a budget gap of $26 million.

"We've gone from four weeks ago from having a budget surplus projected at $28 million, to today looking to solve a preliminary budget gap of $26 million," Phoenix City Manage Ed Zuercher said Monday. "And that's after accounting for spending reductions and a hiring freeze instituted on March 19."

One reason for the sudden shortfall is a massive drop in sales tax revenue as the coronavirus pandemic caused the economy to grind to a virtual halt. With the state's stay-at-home order in place, people are not spending their money the way they have in the past.

Both Zuercher and Mayor Kate Gallego expressed the importance of keeping services provided by the City intact.

"I believe we have even more difficult decisions in front of us," Gallego said during Monday's City Council meeting. She also thanked the members for coming together and "being committed to getting the city through this, and knowing that we have essential services that we provide to our community, and we have to find ways to do that work in these lean times."

► Phoenix Mayor Kate Gallego discusses budget cuts on "Good Morning Arizona" (April 7, 2020)

City leaders will be meeting this afternoon to look at a variety of options, including selling surplus land, dipping into a rainy-day fund, not replacing aging vehicles, and trimming payments to the pension fund for city workers.

“At the City of Phoenix, the City Manager has asked each department to make a 25 percent budget cut list in case it is necessary,” Gallego said in a tweet last week. “We are trying to tighten our belts along with everyone.”

COVID-19 threatens robust Phoenix-area city budgets Most Valley cities generate the bulk of their revenue through sales tax, but COVID-19’s impact on business has all but dried that stream up.

In addition to looking for ways to save money and generate some revenue, the City also will be looking at a proposal to spend about $1 million on public safety, including a new Office of Accountability and Transparency for the police department.