If Benicia does nothing on the financial front, the changes it has made so far should result in balanced budgets in the near future. But beginning about five years from now, expenses will exceed revenues — and in 10 years, the city’s reserves could drop from a mandated 20 percent of revenues to a mere 5 percent.

That’s according to the latest edition of the General Fund 10-Year Forecast presented simultaneously Tuesday night to the City Council and Finance Committee by Finance Director Karin Schnaider.

But former Finance Committee Chairperson Dennis Lowry warned that by the Council’s own 2011 ruling, the city can’t allow the final 10 percent in reserves to be spent on anything other than a natural disaster or other such emergency — which, he said, made the report “a six-year forecast.”

However, Lowry praised the document, saying, “I like the nuts and bolts,” and added that it has sparked “a conversation on finance assumptions” and serves as a tool that can let employees and officials, as well as the public, see causes and effects on the city’s fiscal health.

Should current conditions persist, the city would hit that 10 percent reserve mark in Fiscal Year 2021-22, the report said, then would fall to 7 percent and 5 percent during the next two years if the city dips into that source to cover expenses and keep the budget balanced.

City Manager Brad Kilger told the joint meeting that Schnaider had taken a conservative approach in developing the forecast.

The city’s General Fund, which pays for much of its operations, is expected to increase in the next few years, boosted in part by a recovering economy and the 1-cent sales tax approved by voters last November as Measure C.

Had that measure failed, reserves would have started a steep decline immediately and would have disappeared by Fiscal Year 2016-17, Schnaider showed in a chart included in the report.

Even with Measure C and if nothing else changes, then before five years have passed Benicia should expect General Fund reserves to start decreasing as expenses start outpacing income, Schnaider said.

The current fiscal year budget is anticipating a $1 million shortfall — with about $30.3 million in income and $31.3 million in spending — because Measure C revenues won’t be coming in right away.

But the 2015-16 year should see revenues of $34.7 million and expenditures of around $34.4 million, she said, a trend that continues through Fiscal Year 2018-19.

However, the forecast predicted Fiscal Year 2019-20 to have $36.7 million in income and nearly $37 million in expenses. Reserves, expected to peak at $7.1 million in Fiscal Year 2017-18, would start slipping the next year, and by 2023-24 the city would have less than $2 million in reserves, with $39 million in revenues and nearly $39.2 million in expenses.

The situation isn’t unique to Benicia, Schnaider said. “You can control expenditures, but you always will be scaling back,” she said. That’s because the city can’t control its income, primarily derived from property, sales and other tax revenues, though some money comes from fees and permits. “You are constantly trying to balance things that are not in alignment with each other.”

She called the forecast “a head’s up” and a challenge for officials and employees to find ways to change the city’s financial direction.

Benicia, which had withstood the earliest edge of the economic downturn, is taking more time to emerge from the deep recession, Schnaider said. Sales tax is still shrinking, she said, though other taxes are doing better.

And there are other fiscal contractions and declines on the horizon, she warned. “We will have a decline,” she said, urging the city to strive to get ahead of the cycle. “We can’t predict a recession. But we must plan for it.”

Personnel costs are the city’s largest expense, and that will steadily increase from the current fiscal year, budgeted at $23.2 million, to nearly $28 million forecast in 2023-24. Operating expenses drop slightly or remain stable over the next five years, but range from $7.4 million in the current fiscal year to $9 million in 10 years.

Capital outlay balloons from $267,000 last fiscal year to nearly $2 million expected in Fiscal Year 2015-16, and remains steady at $2.06 million for the rest of the forecast.

But debt payments, at nearly $400,000 each both last fiscal year and this one, decline to $114,000 in Fiscal Year 2016-17 and remains at that level for the balance of the decade.

Pension costs remain a concern, Schnaider said. “Short-term, it’s pretty active,” she said. She said the city’s share of the California Public Employees Retirement Service will experience a five- to seven-year climb before it levels off. But even when it’s level, she said, “it’s still volatile.”

On the other hand, Benicia has planned well. “We are where we said we would be,” she said.

The overall forecast is a look into the future, but is just one of the tools Benicia employees are using during its comprehensive effort to streamline operations, examine which services it would continue to offer and to uncover other ways to become fiscally sustainable, panelists noted.

One approach is to push economic development to increase revenues, several panelists said.

“We can’t cut our way out of this or tax our way out of this,” Finance Committee Chairperson Michael Clarke said. “We need to move forward with economic development,” he added in a declaration that received support from other committee members.

Clarke called for Benicia Industrial Park improvements, such as roads and broadband service, as well as modifying the park’s buildings to “bring it to the modern age.”

“We have a lot to do,” City Treasurer Kenneth Paulk said, listing the maintenance of growth and control of expenses.

Vice Mayor Mark Hughes concurred with Clarke. “We need more aggressive economic development,” he said. While the rest of the San Francisco Bay Area has companies looking to move into other industrial parks, Benicia’s site may not be ready to accommodate them for the reasons Clarke cited, Hughes said.

Benicia should expand its industrial zoning area, he said, reminding panelists that the Albert Seeno family owns more than 500 undeveloped acres in the city’s north side and pointing out that 3 million acres of industrial sites in development will be the city’s competitor in landing those companies.

Councilmember Tom Campbell suggested the city consider buying the Seeno property, which at one time was seen as a possible business park site. “How much is 500 acres of farmland worth? Campbell asked.

Councilmember Alan Schwartzman asked for the price to upgrade the Industrial Park’s buildings. “We need real figures,” he said.

“If we do nothing, we’re in trouble,” Councilmember Christina Strawbridge said. In fact, Measure C won’t be giving the city much in the way of breathing room, she observed, urging the city to do a “big plan.”

Mayor Elizabeth Patterson reminded panelists that developing raw acreage into an additional Industrial Park site has costs, too — including the same roads and broadband needs of the existing park.

But, explaining that Benicia’s Tuesday meeting is “part of a bigger conversation” that is happening statewide, Patterson said, “It’s time to invest.”