The City of Ottawa faces a $118-million budget shortfall for 2008, says the city's treasurer.

Marian Simulik presented the projected gap between next year's costs and revenues to the city's long-range financial plan sub-committee on Wednesday.

The shortfall means balancing the budget using increased tax revenues alone would require a 12 to 13 per cent tax hike.

After the presentation, Mayor Larry O'Brien, who chairs the committee, said he still believes the city can keep his election promise of zero per cent tax increases over four years.

"There will be one very tough battle for me to agree to anything above zero because I still believe there's lots of options," he said.

This year, the city used a reserve fund and one-time spending to keep its property tax increase at zero per cent.

On Wednesday, councillors on the committee agreed to come up with a set of budgeting rules that would likely ban the city from using similar tactics to balance the budget again.