Council Takes Strong Action to Slash Costs : Recession: Demotions and layoffs are only the first steps, officials say, and further cuts will be necessary to stave off anticipated $3.2-million deficit over two years.

Facing a sharp drop in sales tax revenue in the last year, the Alhambra City Council has demoted some workers, laid off others and adopted a slew of other cost-cutting measures.

Officials warned that the measures--which will save the city $857,677--are just the first steps in coping with the lingering recession. Further cuts will be necessary, they said, to stave off an expected $3.2-million deficit over the next two years.

Heavily dependent on sales tax revenue from car dealers on its Main Street Auto Row, Alhambra is suffering from a 25% drop in auto sales between October and December. Part of the drop was caused by the closure in October of Jim Marino Imports, a Mercedes-Benz dealership, and the bankruptcy of Century BMW.

Overall, the city will take in $1.5 million less in total sales taxes this fiscal year than officials had expected.

On Monday, the council voted unanimously to:

* Lay off five part-time maintenance and clerical workers.

* Eliminate seven full-time positions, mostly secretarial and clerical. Six of the positions are currently vacant; one secretary will be moved to another department.

* Freeze eight vacant positions, including those of four police officers.

* Reduce salaries of 10 employees who were transferred to lower-ranking jobs.

* Close the city library Thursday evenings; it will remain open until 9 p.m. Mondays through Wednesdays.

* Postpone or cancel purchases of equipment such as computers and laser printers.

* Deny cost-of-living raises to 55 management employees.

* Improve retirement benefits for eight employees as an incentive for early retirement.

The personnel changes will take effect March 2 to give laid-off employees time to look for jobs, Personnel Director Ann Wilson said.

This is the second round of cuts that Alhambra has made within a year. Last March, the council eliminated some jobs, cut programs, and closed a swimming pool and a library. It also raised some taxes and fees.

“No one’s happy, but you’d have to be blind to not know what’s going on,” City Manager Kevin J. Murphy said. He added that the city will probably deny raises to all 420 full-time employees but that issue must first be discussed with the employee associations.

Not all salaries are affected, however. Four months ago, Murphy asked for, and got, a 15% pay increase. He now makes $100,000 a year.

John Eimans, president of the Alhambra Employees Assn., criticized Murphy for requesting the raise and for awarding raises to management employees late last year while the city was in a fiscal crisis.

“If these are such hard times as Kevin would say, we should not be spending money on these things,” Eimans said. “We feel he could’ve held off (on his raise) a year. The city has a tendency to go ahead and chop at the bottom instead of at the top.”

To save the city money, Murphy said, he had gone two years without a raise. But he does now make $5,000 more a year than the council had budgeted in 1990.

“I feel comfortable with what the city has done, very comfortable with how I’m being compensated,” he said. “It’s a mere pittance compared to what (Chrysler Corp. Chairman) Lee Iacocca makes. If I were making 99 cents, it’d still be a topic of conversation.”

Free-lance writer Brad Haugaard contributed to this report.