Officials in Flint say the city's financial situation was recovering until a switch to the Flint River caused lead to leach from old pipes into some homes.
Mayor Karen Weaver's office says a proposed 2016-17 operating budget she presented Monday to the Flint City Council identifies a projected $35 million deficit in the city's Water and Sewer Fund.
The mayor's office cites litigation over water rates and her declaration of a water emergency due to the lead-tainted water as factors for the projected deficit.
Flint's finance director says many residents concerned about the drinking water aren't paying utility bills.
Flint was under a state-appointed emergency manager when it switched from Detroit's water system to the Flint River in 2014 to save money.
It has since returned to Detroit's system.
