Cities Gird for Big Hit From the State Budget : Austerity: No municipality in county escapes the ax; officials scramble for reserve funds to make up the $81 million in cuts.

No city in San Diego County escaped unscathed Wednesday when Gov. Pete Wilson finally signed an austere state budget.

Although none of the city managers and finance directors were pushing panic buttons, many had to scramble to their bank accounts to dig out reserve funds to make up for the approximately $81 million the state budget slashed from the county’s economy. That figure includes property tax losses to the county, 18 cities, and myriad special districts.

The only consolation for most officials was that the budget crunch and need for cutbacks in city services have long been anticipated.

But uncertainty lingers over what might happen next to local economies. The fact that the state seems to be making a habit of turning to the cities to solve its problems has officials worried.

“This is not the first time but the third year in a row the state has done something substantial to cities to balance the state budget,” said Warren Shafer, the city manager of Encinitas for the past six years. “When you are hit three times in a row, you have to be a little apprehensive about what is coming next.”

That is the kind of uneasiness being felt by San Diego city officials, who were facing a loss of an estimated $13 million in state revenue. Those state cuts are especially painful because they followed two reductions that trimmed the city’s budget by $41 million, City Manager Jack McGrory said.

When McGrory unveiled the city’s $1.3-million budget last spring, he had anticipated problems from the state and the economy and cut about $25 million from city services and programs. In the past few months, however, because of a recession-spawned decline in sales taxes and other revenue, the city budget dropped by another $16 million, McGrory said.

And the outlook does not appear much better.

“Unfortunately, I don’t see this as necessarily the end,” McGrory said.

For the moment, the answer to the city’s financial crunch will probably come through employee wage reductions and cuts in non-personnel expenses such as out-of-town travel, equipment and supplies, McGrory said. Although city officials have tried to avoid layoffs to the city’s 9,500-member work force, McGrory did not rule them out.

The number of police officers and firefighters would not be reduced, but most other city departments could face staffing cutbacks if the other budget-cutting measures being considered prove insufficient, McGrory said.

Budget problems are just as critical at the county’s smaller cities. Imperial Beach has been reducing its services and staff for a decade and is now left with a $7 million budget already slashed to its core, said Robert Hain, the city’s director of administrative services.

Imperial Beach officials prepared for the $200,000 loss from its property tax revenues the state handed down today, Hain said. But more losses, which could still come this year, would be devastating, he said.

“We are now at the bare-bone essentials, anything that goes beyond this could harm essential programs, no doubt about it,” Hain said, adding that the city staff of 130 in 1982 has now been cut to 50. “There is a serious potential here if this keeps going.”

In the East County city of El Cajon, City Manager Robert Acker said $900,000 in state revenue was lost, about $500,000 of which would have come from redevelopment funds. That loss could not have come at a worse time, Acker added.

“We’re getting ready to enter the bond market. I’m quite concerned about what the impact of that (loss) might be,” Acker said.

Still unclear to city officials is the outcome of $19 million in state budget cuts to the small special districts that provide many county areas with essentials such as water, sanitation and, in some areas, fire services. In a city such as Encinitas, for example, a separate fire district run by the City Council covers the entire 26-square-mile city plus the neighboring 800-acre Ecke Ranch.

Under a worst-case scenario, the fire district could be hit with a $600,000 cutback, a devastating blow to the district’s $7-million annual budget that would prompt the possibility of layoffs in the 70-member fire district staff, Shafer said.

“That would obviously mean some reduction in services and some reduction in personnel,” Shafer said.

On the bright side of the budget picture, cities with lands around San Diego Bay could get some help, thanks to a budget amendment that will allow them to share some of the reserves of the San Diego Unified Port District. Although an agreement for use of the funds would have to be hammered out between the Port District and the cities of San Diego, Imperial Beach, Chula Vista, National City and Coronado, the port money could bring anywhere from hundreds of dollars to a city such as Chula Vista to as much as $4 million to San Diego.

Times staff writer Barry M. Horstman and correspondent Richard Core contributed to this report.