The City Council is expected tonight to approve a $6.7 million budget for 2013 with revenues projected to be around $330,000 less than expenditures.

Mark Schlagheck, city manager, said the city’s $4.6 million “rainy day” fund would cover the deficit.

“In future years, this (rainy day fund) balance is expected to decrease significantly as the impact of state budget cuts is fully realized,” he said in a written presentation to the council.

This year’s budgeted expenses are around 3 percent less than last year’s, while budgeted revenues are down roughly 11 percent.

Fire and police costs account for 53 percent of the city’s expenses. On the revenue side, 44 percent of the city’s income is from property taxes. The city’s water system is projected to show a nearly $200,000 surplus. The city froze water rates last year and does not expect an increase this year, Schlagheck said.

With the approval last year by voters of a 1.3 mill general fund levy, the city staff put forward a 5-year capital improvement plan. This year the city is budgeting $150,000 for street repair and resurfacing and plans an identical amount every year through 2017, subject to council approval.

The remainder of the budgeted $480,200 for capital improvements will go for vehicles and equipment for fire, police and services, and $8,000 for computer upgrades and other technology.

Major water, stormwater and road improvements are spread out from 2014 through 2017.