SALT LAKE CITY — Only days away from when the Salt Lake City Council was scheduled to approve the city's $237 million budget, city leaders learned they're facing a more than $1 million shortfall.

The shortfall is due to a revised property tax rule adopted by the state, city leaders said Thursday.

"This is disappointing news and will make our decisions about how best to balance the city’s needs with available revenues much more difficult,” City Council Chairman Stan Penfold said in a statement. “The mayor’s recommended budget is very constrained in the first place, so this added limitation coming at the last minute makes it even harder to meet the expectations residents have for services in Salt Lake City."

Penfold said council members are exploring options to address the shortfall, and they still expect to approve the budget during Tuesday's meeting.

“There are no easy answers, and we will look at all options to balance the budget,” Penfold said. “In the year ahead, we will need to take a hard look at how we further tackle our infrastructure and maintenance issues citywide.”

Mayor Jackie Biskupski's budget assumed $2.6 million in new growth in property tax revenue, but the city will only receive $1.53 million this year, city officials said.

Property taxes make up about one-third of the city's general fund, which pays for city services such as public safety, street maintenance, parks, planning and zoning, housing and neighborhood development, and the offices of the city attorney, City Council and the mayor.

The revenue shortfall is the result of how the Utah State Tax Commission now calculates growth in property taxes, city officials said. The new interpretation, which went into effect this year, separates tax on real estate and buildings from tax on personal property — such as vehicles, computer equipment, machinery and furnishings.

City officials said the tax commission informed local governments of its final property tax revenue estimates Thursday, an annual notification that occurs each year shortly before budgets for the coming fiscal year must be adopted.

Under state law, the City Council must adopt a budget no later than June 22.