Santa Barbara officials are grappling with a public works budget that may be reduced by one-third if voters don’t extend a half-percent sales tax known as Measure D before 2010.

With that deadline looming, council members are expected to discuss today how to spend existing Measure D money over the next three years.

The city stands to lose between $5 and $6 million for projects such as bridge repair, public transit and street lights.

Related: Goleta Approves 3-Year Measure D outlay

The Goleta City Council late Monday moved a flood control proposal, described by officials as “the highest priority improvement project for the city,” one step closer to construction.

In a 5-0 vote, the council OK’d findings released last month that a $14 million revamp of the lower San Jose Creek channel through Old Town would not have significant negative effects on the environment.

In doing so, council members directed staff managers to add language describing why alternative designs championed by some environmental organizations would not be feasible.

Dwindling home sales and a dramatic rise in foreclosures are shrinking Santa Barbara County’s property tax gains and putting a damper on future spending.

A cooling real estate market has slowed growth in property taxes this year and may deprive the county of $6 million it could have used on salaries, construction projects and health care for the uninsured.

County Executive Mike Brown said officials planned for the drop, but he warned of future belt-tightening.

 “It means you shouldn’t start new things, and if you do, you should cut other things,” Brown said.