FLINT (WWJ/AP) – The contaminated water problems of Flint are well known. But the city is struggling with another problem — a nearly $35 million budget deficit.

Officials say the city’s financial situation was recovering until a switch to the Flint River caused lead to leach from old pipes into some homes.

READ MORE: 2 Ice Fishermen Rescued After Trapped By Open Water In Michigan's Thumb Region

Mayor Karen Weaver’s office says a proposed 2016-17 operating budget she presented Monday to the Flint City Council identifies a projected $35 million deficit in the city’s Water and Sewer Fund.

The mayor’s office cites litigation over water rates and her declaration of a water emergency due to the lead-tainted water as factors for the projected deficit.

READ MORE: Woman Who Slipped On Lemon At Detroit Bar Loses Appeal

Flint’s finance director says many residents concerned about the drinking water aren’t paying utility bills.

Flint was under a state-appointed emergency manager when it switched from Detroit’s water system to the Flint River in 2014 to save money. It has since returned to Detroit’s system.

MORE NEWS: Some Michigan Counties Pause Jury Trials Due To COVID Surge

TM and © Copyright 2016 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2016 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.