Deeper Budget Cuts Sought by City Manager : Long Beach: In October, he ordered 3% reductions. Now he says 5% is needed.

The city manager has told all city departments except the understaffed Police Department to prepare another round of budget cuts and to limit hiring to make up an anticipated $10-million shortfall in revenues.

In a memo distributed last week to top city officials, City Manager James Hankla said the reductions are necessary to avoid “dramatic” increases in taxes and other fees. “We must prepare for difficult times,” he stated.

The new orders mean that city departments must now trim their spending by a total of 5% to balance the city’s $240-million general fund budget, officials said. In October, Hankla had ordered department heads to cut spending by 3%.

Assistant City Manager John Shirey said that the city does not yet know how the additional cuts of 2% will affect services such as parks and libraries. “Hopefully the departments can figure out how to do this without a serious impact on services,” Shirey said. “But they may have to come back to us and propose that certain services be trimmed.”

City officials blame the cuts on an economic slump that has left the city spending more money than it is receiving in taxes, fees and other revenues. The city was so strapped for money that it increased its utility tax earlier in the year to help pay for patrols by sheriff’s deputies in two sections of the city.

Sales tax revenues may be $2 million lower than expected, as consumers put the brakes on spending, Financial Management Director James Algie said. Officials expect revenues from other taxes and fees, including business licenses, to drop as well.

Long Beach and other cities are also expected to feel the financial impact of a new state law that allows counties to charge municipalities for collecting city taxes and for booking city prisoners into County Jail. Budget Director Robert Torrez estimated that Long Beach will be forced to pay another $1.5 million as a result of the law.

The crisis in the Persian Gulf has pumped the price of fuel to an all-time high, providing a mixed blessing. While the city has received increased revenues from oil wells, that bonus will be outweighed by a jump in the cost of gas for the city’s many garbage trucks, park vehicles and other city automobiles.

Hankla’s three-page memo stated that there can be virtually no new programs and spending, unless they are critical and have been approved by his office. Hiring will be allowed only for “essential” positions, according to the memo.

Several department heads said they will attempt to meet Hankla’s orders without cutting staff.

“We’ll have to pull in the belt all over,” Parks Director Ralph Cryder said. Cryder said that his department will need to cut back on purchases of new equipment from paper to trucks.

Algie said he hoped the cuts would would help the city balance its budget.

The city has only about $700,000 in its general reserve fund now. “But if we do go into this curtailment, we’ll end the year with a reasonably balanced budget,” Algie said.