WAILUKU, Maui - Maui County is facing a $13.9 million budget shortfall for the current year, according to a letter sent by Mayor Charmaine Tavares to the Maui County Council on Thursday.

For months, finance officials have been warning that the county could face a decline in revenues by $50 million or more in the 2011 fiscal year, but Tavares said it now appears that the economic downturn has struck county finances sooner than anticipated.

The projected shortfall represents a little more than 2 percent of the county's budget of $563.7 million for this year.

Revenues appear to be coming in lower than the amount that was budgeted in four key county funds, she said. The biggest anticipated deficit is in the General Fund, which is facing a $5.5 million potential shortfall. Other affected funds are the Highway Fund, with a $2.5 million shortfall; the Solid Waste Fund, $1.4 million; and the Water Supply Fund, $4.5 million, according to her letter.

Tavares noted that the Maui County Code requires the mayor to notify the council as soon as it appears probable that county revenues won't be sufficient to cover what was appropriated, and asked for a time to address the council about the issue.

In her letter, she said the county's Finance Department and budget office are performing a more in-depth analysis of the numbers to come up with a more accurate revenue picture.

"Please know that my administration has already undertaken steps to curtail expenditures and expenses in the current fiscal year, and these will help alleviate the impact of a revenue shortfall," she told council members.

She said the county is also developing additional strategies to cope with the situation.

Tavares' warning came on top of other bad news for the county budget.

County Finance Director Kalbert Young said Friday that property tax assessments for the 2011 fiscal year now look like they will be worse than previously forecast.

He said he now predicts valuations will decline by 13 percent, a bigger drop than the 10 percent decrease he projected last year. That means property tax revenues will be cut by the same amount, unless the county increases rates to compensate, he noted.

The expected $50 million decline in county revenues for 2011 could grow to as much as $68 million if the state Legislature moves forward with proposals to withhold Maui County's portion of the transient accommodations tax, also known as the hotel room tax.

While his preview for the coming year sounds dire, Young said the county government is actually still near the beginning of its fiscal slide.

In his extended forecast, Young said he is projecting an additional 10 percent decline in revenues for 2012, and another 15 percent decline in 2013.

Maui's real estate market will likely be on the rebound by then, he said, but the county's revenues will still be lagging because tax collections are based on assessments made the year before.

"I don't have reasons to be optimistic," he said.

Young was speaking during a presentation to the county's Salary Commission.

All county directors have been instructed to propose two spending plans for their departments for the mayor's 2011 budget, Young said. One proposal must find a way to cover increased costs with the same budget they had this year; the alternative proposal must account for a 10 percent cut in funding, he said.

"That is the scenario that would lead to program cuts," Young said. "With a 10 percent cut, you're either going to be touching warm bodies, or you're going to be touching facility operations."

In her State of the County speech Thursday, Mayor Charmaine Tavares said the county would likely have to reduce services in response to funding declines in 2011. That could mean reducing residential trash pickup from twice a week to once a week, closing the Central Maui Landfill one or two days per week, closing one or more county pools or cutting hours for county service centers, she said.

The county will also likely look at raising revenues by increasing real property tax rates or passing a fuel tax hike, she said.

But Tavares said she did not want to lay off county workers.