ROCKFORD — Deep spending cuts and creative new ways to raise revenue could be the only solutions to a brewing city of Rockford financial crisis.

Finance Director Carrie Eklund on Monday told aldermen that without significant changes, she projects the city will face a $10.2 million general fund deficit by the end of 2018.

"My goal for this budget cycle is structural corrections," Eklund said. "We don't have one-time revenues available anymore. This has to be permanent revenue increases, permanent expense reductions. And lining those up so they are on the same path moving forward."

Although the city's revenue is growing, it cannot keep pace with its spending. The result is what Eklund calls a structural deficit. Sales tax revenues have rebounded, but have not returned to levels seen before The Great Recession and revenues overall are growing at about 2 percent a year. Meanwhile, pension and employee costs continue to climb and expenses are growing at about 3 percent annually.

Complicating matters, Illinois is expected to return $2.4 million less in income and replacement tax revenue to the city next year as the state navigates its own budget crisis.

Mayor Tom McNamara said Illinois lawmakers are taxing residents more, and dipping into municipal funds.

"The state continues to abdicate their responsibilities and put more of the burden on us, here at the local level," McNamara said. "The state has taken more of all our money in income taxes and they have provided less of our money from our income taxes."

Rockford has made significant staffing cuts since The Great Recession, reducing its total number of employees by 55, or about 7 percent, from 804 down to 749 employees since 2008.

The city has cut the number of employees in public works, community and economic development and support departments by 22.9 percent since 2008, going from 183 to 141 employees.

Rockford spends about 75 percent of its $139.2 million general fund (the city's primary operating account) on police and fire operations. Staffing for the Rockford Fire and Police Departments is 2 percent below 2008 levels, falling from 621 employees in 2008 to 608 police officers, firefighters and civilian support staff.

How to balance the budget will pose a thorny challenge for aldermen.

City Council this year avoided instituting a utility tax and staff cuts, opting instead to sell city-owned property and spend reserve cash to cover a more than $5 million general fund shortfall and spend additional money on technology upgrades for the Police Department. It also created a task force of community financial experts, bankers and business owners to come up with recommendations on new ways to raise revenues, improve efficiency or cut spending.

That task force has worked since June, studying city finances. It could deliver its cost saving and revenue generating recommendations to the City Council in December. Among them could, for example, be a proposal to prosecute ordinance violations in-house to retain a greater share of fine revenue than if prosecuted in Winnebago County Court and generate nearly $200,000 a year.

"We are going to need large structural changes to our operations," McNamara said.

Jeff Kolkey: 815-987-1374; jkolkey@rrstar.com;@jeffkolkey