O’Connor Offers Budget Proposal : Finance: Mayor says her $427-million plan would solve city’s fiscal woes by freezing spending, banning new hires and delaying large expenditures.

Mayor Maureen O’Connor on Wednesday recommended that the city of San Diego solve its upcoming budget crunch by freezing general fund spending at current levels, extending a ban on new hires and postponing large capital expenditures.

O’Connor’s proposed $427-million general fund budget for the fiscal year beginning July 1 rules out any new general fund revenue sources, with the exception of a possible increase in business license fees.

“No one gets an increase and no one gets a cut,” O’Connor said in a prepared statement. “Everyone maintains their 1990 funding level . . . and “public safety services would continue to receive funding priority, garnering over 50% of the city’s budget.”

O’Connor’s budget proposal provided a sharp contrast to the $444-million budget that City Manager John Lockwood proposed last week. Lockwood’s proposed budget described a $60-million gap between existing general fund revenue and the amount of money needed to keep services at their existing level as the city grows.

To balance that budget proposal, Lockwood suggested that the city preserve public safety services by slashing budgets for the library, recreation centers and pools. Lockwood also suggested that the city solve its general-fund shortfall by appropriating transit occupancy tax revenue now used to fund arts programs and civic promotion campaigns.

O’Connor’s budget acknowledges that, even with a freeze, the city would need to find $13 million in new revenue or an equivalent amount of savings through selected budget cuts. O’Connor believes those cuts can be achieved through elimination of the City Council committee system, attrition, miscellaneous savings and innovative ideas from the council.

“The $13-million shortfall projected in my freeze budget can be covered without crippling the libraries, raiding the arts or cutting the Park and Recreation Department,” O’Connor said. The mayor’s proposed budget would earmark TOT funds for arts and promotion programs.

Critics argued that, although O’Connor’s proposed budget would freeze spending, it also would force departments to cut services, if only because of costs generated by inflation and existing labor contracts.

Inflation and labor costs will increase the city’s spending by $28 million during the coming fiscal year, Councilman Ron Roberts said, “so even if you freeze everything, you’ve still got to make cuts” to account for that total.

O’Connor’s proposed budget “really means that some of these departments are going to face cuts,” Roberts said. “The mayor is going to have to define what the cuts actually mean.,”

“No question you’d have a slight decrease in the level of service,” O’Connor spokesman Paul Downey said. “But it would be across the board, so everybody takes a slight hit budget-wise. Nobody takes a major hit in our plan. . . . You don’t solve budgetary problems by slashing the library budget by 50%.”

O’Connor said existing funding levels are “well-balanced between all the city’s competing interests . . . there is no need to upset that balance. . . . If inadequate funds are available, all programs should share proportionately in the loss.”

O’Connor also called for the creation of a blue-ribbon panel that would develop a long-range financial plan for the city. That program would eliminate yearly budget battles in council by reasonably projecting revenues and expenses over five years, O’Connor said.