Millbrae will have a budget gap without an annual fire assessment passed in 2004 and extended in 2009, according to a five-year financial forecast to be shared with the City Council tonight.

The five-year forecast simply shares information with the council about upcoming possible financial issues. As it stands, the city could have a gap in funding starting in the 2014-15 year — when it no longer receives money from the fire assessment tax, according to a report prepared by Finance Director LaRae Brown.

"[T]he five-year forecast demonstrates significant structural challenges are facing the city in the very near future. Unless the economy performs considerably better than projected, new revenue sources are implemented or total expenditures are lowered, the city will need to further reduce day-to-day service levels in order to ensure long-term fiscal health and vitality,” Brown wrote.

Losing revenue from the fire tax has one of the largest possible impacts.

Millbrae voters originally passed the $144 yearly fee for fire services on single-family homes in 2004 as one solution to address the city’s budget crisis, which began in 2001. It was extended in 2009. The levy brings in about $1.44 million annually, which means a four-year cumulative loss of about $5.76 million, Brown wrote.

Among the other fiscal challenges, the forecast predicts an increase in the pension obligation payments, an increase in the California Public Employee’s Retirement System contribution rates, only $50,000 for capital projects, and not meeting the city’s 15 percent reserve policy, Brown wrote.

Annually, the projected budget gap would range from $1.4 million in 2014-15 to $2.05 million in 2017-18 if no changes are made, Brown wrote.

The council meets 7 p.m. Tuesday, Oct. 23 at City Hall, 621 Magnolia Ave., Millbrae.