And They Said It Couldn’t Happen Here : Budget: The council must lay off employees for the first time in the city’s recent history in an effort to trim $11 million from the proposed spending plan.

It has been a rough week for the city of Beverly Hills. But things are about to get tougher.

City officials, struggling with the painful choices imposed by a looming budget deficit, have been trying to figure out ways to cut $11 million from the city’s proposed $80-million budget.

And for the first time in the affluent city’s recent history, that will mean layoffs. City Council members have been meeting with department heads behind closed doors during the past week to try to determine how many jobs can be eliminated in the fiscal year starting July 1 without greatly reducing services to the city’s 32,000 residents.

Although council members say they haven’t decided how many employees must be laid off, close to 50 positions have been targeted for elimination in the proposed budget cuts. That does not include about 35 positions that are vacant because of a hiring freeze that the council has already decided to impose.

“This has been a real struggle for us,” Mayor Vicki Reynolds said. “This is a new situation for us and it’s obviously a difficult one. But we’re working as hard as we can to make the best decisions possible.”

The cuts are likely to stir lots of public debate because the brunt of the layoffs probably will fall on the city’s two largest departments--police and fire.

City Manager Mark Scott, in his overview of the budget, has advised council members that they could make up to $2 million in personnel cuts from the Police Department and more than $1.4 million in cuts from the Fire Department.

If the council adopts Scott’s recommendations, it could result in the loss of one engine company, a paramedic unit and several police officers from a city that touts its public safety departments as among the best in the nation.

So far, city officials have shied away from disclosing any information about the proposed layoffs, which are listed under the category “various other” in the budget. The General Services Department has nearly $300,000 listed under the category, Building and Safety has $250,000, and Public Works has $200,000.

City officials, who like to say that Beverly Hills has more trees than people, are also considering letting the municipal landscape suffer for a while. Among the cuts is a $700,000 reduction in tree-trimming services.

The council met for more than eight hours in closed session last week to discuss the personnel reductions and met privately with Fire Chief William Daley and Police Chief Marvin D. Iannone. The council will meet in closed session again Monday afternoon before holding its first public hearing on the budget Tuesday evening. Reynolds said the first public discussion on layoffs likely won’t be held until later in the week.

“We clearly are going to have to make cuts,” Councilman Allan L. Alexander said. “If we’re not going to have any revenue enhancements then I can’t see any other option we have.”

Most of the council members said they would rather make some deep cuts than raise taxes, which they said would unfairly punish residents for the city’s past spending decisions. The council had considered imposing a utility tax or a gross receipts tax to raise revenues, but instead will only raise the hotel tax from 11% to 12% to raise an additional $500,000 annually.

The idea of layoffs has been anathema to a city that has for decades enjoyed the fruits of a rich populace and a thriving business community. The last time the city experienced anything like this was after the passage of Proposition 13 in 1978, when Beverly Hills lost more than $4 million in property taxes.

But rather than lay off employees, city officials raised business taxes to offset the reduction in funds.

City officials blame their budget woes on an unexpected drop in sales tax revenue, which fell more than $4 million short of projections during the past year. The city is also stuck with a huge debt from the lavish new Civic Center, whose $120-million cost was three times what had been originally estimated.

The city was further battered by the unexpected collapse of two of the town’s biggest businesses. When Drexel Burnham Lambert and Columbia Savings & Loan plunged into insolvency with the crash of the junk-bond market and the savings and loan industry, it had a significant ripple effect through the city’s economy, particularly on hotels, restaurants and retail shops.

“I’d be upset if the council were not struggling with these decisions,” Alexander said. “It’s the first time since any of us have been on the council that we had to deal with hard facts of a recession. And cutting personnel, people who have been with the city who need to provide for their families, is an extremely difficult thing.”