Alameda is facing multi-million-dollar budget deficits over the next five years that could bankrupt the city if major changes aren’t made now, the city’s top elected finance officers said Tuesday.

“Based on where they are now, in a little over two years, you’re out of money,” City Treasurer Kevin Kennedy told a reporter after an impassioned appeal to the City Council to quickly address the city’s money problems that liberally cited bankrupt Vallejo as a cautionary tale.

The City Council may consider slashing staff and programs, cutting pay and increasing city employees’ contribution to retirement and health care costs in order to bring the city's spending in line with the money it’s taking in, city officials said after offering a grim budget forecast to the council on Tuesday night. Alameda is facing a $6.2 million general fund budget shortfall next year and growing deficits for each of the four years that follow it; without major cuts or more money, the city will exhaust its fund balance before the end of the 2013-2014 fiscal year, the forecast showed.

“The day of reckoning is here,” City Councilman Doug deHaan said after top city staffers told the council their store of one-time budget-fixing tricks has run out. Acting City Manager Lisa Goldman said major structural fixes are needed and asked the council for direction on the solutions city staff should pursue.

Council members first offered stunned silence and then little more, saying only that they want core services protected and that they want community guidance on what those are. But Kennedy and City Auditor Kevin Kearney said the council knew the big budget problems were coming and that they need to act quickly to keep the city solvent.

They said the council needs to cap growing employee benefit costs. If the council doesn’t act, the city may find itself forced to slash staff and unable to pay the benefits it promised to employees, the pair said.

“If we don’t decide, a court will decide,” Kennedy said. “It will be a bankruptcy attorney and bankruptcy court.”

Mayor Marie Gilmore said she agreed pension reform is necessary, but said it won’t solve the city’s current fiscal problems. Kennedy and Kearney said the fixes still need to happen to keep the city solvent, and they said they want city leaders to consider cutting salaries instead of laying off staff. They said the city should also consider asking employees to share increases in pension and health care costs, something Goldman said the city’s management employees are willing to do.

Employee retirement and health care costs alone are expected to grow by $2.8 million in 2011-2012, with more than $1.3 million of that going toward increased retirement benefit costs for public safety employees. The city’s retirement plan contributions for public safety employees are expected to grow from 31 cents on the dollar this year to 45 cents in 2015, and from 13 cents for the rest of the city’s employees this year to 19 cents in 2015.

The city is also facing an $860,000 payment to Alameda County for emergency medical services next year, and city staffers are anticipating additional fuel and other supply costs of $622,000. Meanwhile, Controller Fred Marsh said the city is expecting to lose $710,000 in sales tax revenues on a continued weak economy. To add, the city expects to lose about $900,000 with the the anticipated dissolution of its redevelopment agency, which pays for some city services it uses, and when it hands over its golf complex and ferry services to a private manager, which will cut into current profits.

Council members asked about opportunities to increase the city’s revenues; Kearney said the city would be hard-pressed to raise enough money to fix the budget. City officials offered a bevy of suggestions for increasing existing taxes or creating new ones, like a parcel tax for public safety services or admission tax on theater tickets. The city will also study its existing fees for possible increases.

The forecast doesn’t include pay increases or new employees. Nor does it factor in the cost of deferred maintenance on city parks and other properties or of saving toward future retiree benefit obligations.

“What we should have been doing was dealing with that when we were in a better financial position. But we’re not there now,” Goldman said.

Goldman said she has asked the city’s department heads to prepare budgets for next year showing 5 percent and 10 percent reductions. Top city staffers will begin vetting those in April for a council budget workshop in May.