"While we cannot report that our financial situation is ideal, I can say that this brings new opportunities for how we do business," Miller said. The city is facing an $11 million projected deficit for the coming fiscal year. But Miller said the proposed state budget cuts could add another $5 million to the city's deficit.

"We must tighten our expenditures while working to preserve basic city services and work hard to find reasonable solutions," she said.

After spending a short time on budget problems, Miller outlined the city's accomplishments from the past year, which included Sunnyvale's ranking as the fifth safest city in the country according to a recent national study.

Also, Miller confirmed the opening of the much-awaited new senior center this July and the city's opening of a skateboard park.

In addition, Miller said, "We are providing affordable-housing opportunities with below­market rate loans so that teachers, police officers and firefighters and employees can live in the city where they work."

But, Miller said, in order to sustain the quality of life Sunnyvale residents are used to, the city must work together to negotiate the budget crisis.

Miller referred to her guiding principles, which she calls "the five Cs": citizenship, caring, community, collaboration and commerce.

"I will look for solutions that will create partnerships among all sectors of our community: with the schools, county, nonprofits and faith-based communities, residents and businesses," Miller said.

She also promised to continue to lobby state officials on the state budget's fiscal impact on Sunnyvale.

Miller said the city has another opportunity to work together with the creation of downtown Sunnyvale by "preserving a sense of the old with our history and incorporating a sense of the new with our future."