ANTIOCH -- Leaders here received a rare bit of good news this week about the city's struggling finances.

Thanks largely to a higher-than-budgeted assessment of property values, Antioch's preliminary numbers to close the books on the 2012-13 fiscal year show its ending balance is about $948,000 more than expected.

That number includes the extra $473,000 from properties, $124,000 more in building permits and $72,000 extra in business license taxes, Finance Director Dawn Merchant said during a report Tuesday.

The city also saved about $434,000 because of fewer expenses by the city's Public Works department, though about half of that money is for unspent projects and will carry over into the budget for the upcoming year.

The city, however, still is staring down a projected gap of $3.5 million between its expenses and its revenue, which means it will have to deficit spend. Antioch's revenue of $35.9 million is also about $11 million less than what it was five years ago.

"We still have a long way to go. It demonstrates that we have a revenue problem more so than an expenditure problem," Merchant said.

Councilman Gary Agopian agreed.

"It's very welcome news, but we're still woefully short," he said. "We risk running out of money. We have no financial means."

Merchant also mentioned in her update that the council borrowed $1.5 million in vehicle and equipment replacement funds in 2010, and existing equipment is starting to show wear. Staff is considering the council establish a repayment plan.

Agopian called for the council to create a two-year plan to balance the city budget, once a new city manager is selected.

"If we don't fix this, none of us here deserves to be on this council," he said.

The council reiterated that fixing the budget would not come from Measure C, a half-cent sales tax initiative on the November ballot. That money is solely meant for hiring police and combating blight, Mayor Wade Harper said.

Contact Paul Burgarino at 925-779-7164. Follow him at Twitter.com/paulburgarino.