San Juan Bautista Fights Just to Live : Mission town: Faced with a growing stack of bills, council fires the city’s 12 employees, leaves City Hall to volunteers.

The police chief is gone. So are the police.

And so are all the other employees of this small Spanish mission town nestled in the rolling hills an hour’s drive south of San Jose.

Since the Public Works Department shut down, volunteer Fire Chief Rick Cokley does the yardwork around his two-engine firehouse.

Volunteers run City Hall. A contractor picks up garbage.

Faced with a budget crunch and a growing stack of bills it could not pay, the San Juan Bautista City Council last September fired the city’s 12 employees.

“There was no way out,” said Robert Paradice, a city councilman and resident of the area since 1955. These days, Paradice doubles as a front desk volunteer at City Hall.

“Hopefully, with volunteer help, we’ll be able to keep our heads above water,” he said.

Residents of San Juan Bautista, as well as experts in municipal finance, say that this municipality’s problems are similar to those facing local governments around the country: declining revenues to finance a continued demand for services.

They say San Juan Bautista’s budget massacre may be a harbinger of things to come elsewhere.

“The revenue base for cities is just dwindling,” said Debbie Thornton, spokeswoman for the League of California Cities, which represents the state’s 469 municipalities.

Many cities are “sticking their heads in the sand,” said John O’Sullivan, whose Municipal Resources Consultants firm in Westlake Village, Calif., advises cities on their financial condition.

However, “I don’t know of many that let it get quite as bad as San Juan Bautista,” he said.

California’s budget crisis is blamed in part for the city’s problems.

According to a legislative analysis released this month, the nation’s richest and most populous state faces a $7.5-billion deficit next year, and the figure could grow to $9.3 billion, close to the shortfall that caused drastic spending cuts this year.

State officials are reducing the amount of sales and property tax revenues available to cities, making drastic municipal action more likely, Thornton and others say.

Some analysts trace the problems to Proposition 13, the state’s precedent-setting property tax limitation measure.

The League of California Cities in 1990 estimated that cities’ per capita revenues had fallen 17.5% from 1978 to 1988.

In fiscal 1991-92, 138 cities in California eliminated more than 3,200 positions through layoffs and attrition, including 1,750 positions in Los Angeles.

San Juan Bautista interim City Manager Russ Carlson, hired under a six-month contract to fix the city’s fiscal mess, was on the job three days when he discovered how bad it really was.

So many bills were stacked up at City Hall that officials were waiting to see how much came in over the counter in public sewer bill payments before they wrote checks to pay the city’s debts, he said.

“It was a wake-up call,” he said.

Of the $800,000 annual city budget, $300,000 was going to meet payroll. The city of 1,650 residents was losing $12,000 to $15,000 a month, he said.

The council acted swiftly. Three full-time police officers, two office workers, a public works employee and six part-time workers were laid off.

Except for Carlson, whose job contract expires in March, the city is functioning with a cadre of a dozen volunteers, including several retirees and unemployed people.

The San Benito County Sheriff’s Department is policing the streets of San Juan Bautista. Apparently, residents say, it helps that the county sheriff is a resident.

“There are those who would argue we are getting better service,” said Mandy Rose, a volunteer in City Hall and a former Planning Commission member.

Carlson says the tiny mission town is an indicator of things to come for other towns and cities, and that severe budget cuts are “a trend you’re going to see for the decade to come.”

City residents, meanwhile, are mixed in their reactions to the budget cutbacks, though few question the need for a change in the way things were run.

“Everything is on a decline,” said Don Clausen, who moved to San Juan Bautista from San Jose in 1959.

He’s not sure laying off everyone was the right way to go, but something had to be done, he said. Chet Moore, a retired truck driver in his 70s who drives to the downtown post office every day to pick up his mail, agrees.

“The national government--it’s broke. We’re worse than that. We’re 400 degrees below broke,” Moore said.

Carlson says he’s been amazed at the high volunteer spirits shown by residents, and thinks the City Council, with two newly elected members, will continue to tackle the city’s financial problems.

“San Juan Bautista is in better shape than ever before,” he said.

Volunteer Fire Chief Cokley frets about the future, and hopes no new cuts affect his ability to fight fires.

“It seems to be a step in the right direction,” he said. “There was definitely something needed to be done.”