Sonoma County government faces its fourth consecutive year of budget reductions, with a projected $10.4 million general fund deficit in the coming 2012-2013 fiscal year, county officials said Tuesday.

The gap is equal to about 3 percent of the projected general fund budget, which makes up about a third of the county's overall budget of $1.2 billion.

The shortfall is smaller than the prior funding gaps, which since 2009 have ranged from $21 million to $42 million. Those deficits resulted in the elimination of nearly 600 county positions, most of them vacant, and employee concessions that included unpaid furloughs.

But increasing county costs, including rising salary and benefit expenses have continued to outpace flat or declining revenues, county officials told the Board of Supervisors in their mid-year budget update.

Property tax revenue, the main source of general fund spending, is now in the third year of a historic decline and is projected to be flat next year, officials said. Meanwhile, salary and benefit costs, including pension costs, are projected to rise by $15.4 million for the general fund employees, or 6.2 percent over the current year, to $263 million, officials reported. .

General fund expenses are projected to total $389.5 million for the coming fiscal year, with revenue at $368 million. A carryover balance of $11 million offsets roughly half of the difference. The remainder is the projected $10.4 million shortfall.

The gap means county departments relying on general fund revenues could see no additional money this year, an effective cut of 5 to 8 percent, said County Administrator Veronica Ferguson.

Supervisors suggested that salary and benefit cuts, many of them dependent on contract talks with employees this year, would be a chief tool in addressing the shortfall.

"Quite possibly our toughest year could be ahead of us," said Supervisor Mike McGuire. "We are not going to get out of this mess without permanent change in our budgeting. And that's going to mean permanent reductions in our pay and/or our pensions."

The board is set to return the issue in April during its third-quarter budget review. Preliminary contract talks with employee groups are set to begin in March.