Budget Threatens City Workers’ Pay : Economy: To help avoid layoffs, city employees might be asked to forgo pay raises they just started receiving.

Struggling to avoid layoffs as Sacramento tightens the budget vise on cities, San Diego plans to ask public employees to give up their two-month old pay increases and to make trims in numerous other areas.

Only two weeks after City Manager Jack McGrory ordered more than $13 million in cuts due to reduced sales taxes and other revenues, the city will need to wring at least $17 million more from its $491-million operating budget under the latest reductions approved by the state Legislature.

In hopes of preventing layoffs and other “catastrophic impacts,” Mayor Maureen O’Connor on Monday unveiled a dozen recommendations spreading “a little economic hardship” among all city workers and operations. Without raising taxes, the mayor also hopes to maintain police and fire protection at current levels.

O’Connor’s budget-cutting suggestions range from eliminating out-of-town travel and memberships in governmental groups such as the League of California Cities--which would save about $600,000--to postponing the awarding of new contracts and reducing office relocation and renovation expenses.

“Our goal must be to lay off the furniture and the frills before we lay off the people,” O’Connor said.

The provision of O’Connor’s plan that affords the greatest potential savings is its most controversial component--asking employees to give up at least part of the 2% wage increase that they began receiving July 1.

“If we’re going to feel a little pain in this town, we’re all going to feel it together,” O’Connor said at a City Hall news conference. “I’m not for cutting anybody’s job.”

Though other top city officials agree with O’Connor’s goals, they say it is getting harder to adhere to them as Sacramento cuts local government funding. City Councilman Bob Filner, for example, said Monday that he plans to propose a 1-cent on the dollar increase in the city’s hotel room tax, adding that he sees “no other way” to close the budget gap.

“The picture gets grimmer week by week, and that reduces our options,” McGrory said.

To date, the city has managed to avoid layoffs while reducing its 9,500-person work force by eliminating vacant positions--216 slots have been cut over the past two months alone. However, McGrory warned Monday that the city’s “flexibility to continue doing that is pretty much gone.”

Earlier this year, the San Diego Police Officers Assn. agreed to relinquish three-quarters of its pay hike to help alleviate the city’s budget constraints, and McGrory has asked three other municipal employee unions to consider a similar salary rollback.

“We realize that the city is facing a crisis, so we’d be willing to at least consider it,” said Ron Saathoff, president of San Diego Firefighters Local 145. “With everybody out there hurting, it would be irresponsible to just flatly rule it out.”

Judie Richards, president of the Municipal Employees Assn., which represents about 3,500 city workers, said that before putting the request to a membership vote, her union would insist that any wage rollback be accompanied by a guarantee that the savings would prevent layoffs.

“Absent that, we have nothing to talk about,” Richards said. “We want to make sure this isn’t just an attempt to get a little more money from the employees.”

Although any wage reduction proposals likely would require the approval of the unions’ membership, city attorneys are researching whether emergency provisions in the City Charter could enable the council to unilaterally enact such cuts. McGrory, however, characterized that possibility as a worst-case scenario. He said it is “highly unlikely” that the council would circumvent existing employee contracts.

Even if a salary rollback is approved, however, it would offset only part of the $12 million in general fund revenues and $5 million in redevelopment dollars that San Diego stands to lose under the revised state budget. Every 1 percentage point cut in employee salaries, McGrory explained, equals a $3-million savings--meaning that the city would save only $6 million.

Consequently, O’Connor suggested other ways to reduce city expenses, including establishing a confidential hot line to her office--236-6902--by which San Diego employees and citizens can offer their own recommendations for cutting costs.

In addition, the mayor used the budget crisis as an opportunity to revive her goal to eliminate the City Council’s “redundant and expensive” committee system, a move that she estimated would save $250,000 annually.

Saying top city officials must “lead by example,” O’Connor, who earlier voluntarily reduced her $65,000 annual salary by $5,000, also agreed to work without pay during the final four months of her term and to return her monthly automobile allowance. Other top city officials, she said, should consider taking unpaid work furloughs and reduce their own office staff budgets, something that McGrory and other administrators already have done.

An O’Connor proposal to use surplus port district revenue to ease San Diego’s budget woes not only failed but strained her relationship with the county’s state legislative delegation, which excluded cities in San Diego county from a measure permitting local governments to receive a share of port districts’ surplus revenue.

Led by Assemblyman Steve Peace (D-Rancho San Diego), the San Diego delegation agreed to remove five cities in the county from the legislation because of a dispute over how the revenue would have been distributed locally. Because of a specification that only charter cities could receive the funds, only two of the five local cities represented on the San Diego Unified Port Commission--San Diego and Chula Vista--would have qualified, excluding National City, Imperial Beach and Coronado.

“It just wasn’t a fair formula--three cities were going to get screwed,” Peace said, adding that the delegation hopes to reinstate San Diego next January after working out a new distribution system.

However, McGrory, whose city would have received a minimum of $4 million, stressed that officials of the five local cities had agreed among themselves on a distribution plan, calling San Diego’s exclusion “irresponsible and disgusting.”

“Assemblyman Peace is not operating in the best interests of the city of San Diego and the member cities of the port,” O’Connor said. Later, the mayor’s spokesman, Paul Downey, extended that remark to include the entire San Diego Assembly delegation, saying: “Our whole delegation has shafted the city.”

Peace, though, noted that a legislative counsel’s opinion has raised questions about the legality of the port funds measure.

“So this may turn out to be much ado about nothing,” he said.