Los Angeles officials received more grim financial news Tuesday as the City Council grappled with the pain of having to downsize some of its most popular programs.

City Controller Wendy Greuel delivered the harsh news, with a forecast that revenues will be down $141 million next year, primarily due to a drop in property taxes that will force the city to borrow more money.

"The mayor and City Council cannot - and should not - count on an increase in tax revenue to help balance the city's budget next year," Greuel said.

Mayor Antonio Villaraigosa and Councilman Bernard Parks, chairman of the Budget and Finance Committee, said Greuel's forecast was expected.

"What this shows is that we need to act and act quickly to make the cuts we need now," Villaraigosa said.

Greuel estimated the city will need to borrow $550 million next year. The city borrowed $400 million in Tax Revenue Anticipation Notes this year.

For the coming year, Greuel said she expects to see a slow improvement in the private sector, but city government will need more time to recover.

Also on Tuesday, the City Council grappled with consolidating the functions of the Human Services Department into the Community Development Department.

Councilman Tom LaBonge said officials wanted to make sure the functions of the departments are continued.

LaBonge said an agreement had been worked out with the mayor to retain the Department of Disability, scaled down but continuing its work with the disabled and the AIDS community.

Councilman Tony Cardenas voiced concern over the impact on community facilitators and anti-gang activities.

"What makes me concerned is that we are looking at the Human Relations Commission, which on its surface looks like an easy job," Cardenas said. "But when we have a volatile situation, it becomes more complicated and the expertise we have cannot be duplicated."

Councilwoman Janice Hahn said she also wanted to have another look at decisions involving the facilitators.

"These are people the community trusts and that's something we couldn't always say," Hahn said. "It took an outside person to come in and help, and I don't want to lose that."