El Segundo Slashes Budget, 15 Jobs : Economy: Defense cutbacks finally take their toll, forcing a $1.1-million cut in town coffers and the layoff of city employees.

El Segundo city employees for years have worked in the eye of an economic hurricane, quietly going about their duties while, within only a two-mile radius, scores of merchants went broke and struggling defense firms laid off thousands of workers.

But the defense cutbacks that have devastated commerce in the small, industrial town over the last five years finally have taken a toll on the work force in City Hall. The council slashed a $28-million budget last week by $1.1 million and cut 15 positions, including the assistant city manager, to pay for a plan to attract new businesses to the city.

The job cuts will offset a 10% reduction in business license taxes, the fees firms pay to operate in El Segundo. Officials hope the tax breaks, which will cost $1.1 million a year and save some businesses as much as $70,000, will attract high-technology firms to fill the office buildings once packed with aerospace workers.

“This will send the message to businesses that we’re willing to make the difficult calls (to attract them), and this was a tough call,” said City Manager James W. Morrison.

But while city officials said the job cuts are essential if El Segundo is to regain its reputation as a high-tech, business-friendly giant, many city workers were shocked by the extent of the cuts.

“It’s disappointing, especially when you’re looking at the fiscal condition of the city and other opportunities to cut,” said Assistant City Manager Don Harrison, whose position was among those cut.

Rather than cut so many jobs, including a fire marshal, a purchasing agent and a librarian, El Segundo could have drawn on its more than $20 million in reserves, Harrison said.

Six of the 15 positions eliminated were vacant, and the remaining layoffs will take effect Aug. 6.

“We’re not popular people with the city employees, I’m sure,” acknowledged City Councilman Liam B. Weston. “But I don’t want to be responsible for rearranging the furniture on the Titanic, and (El Segundo is) about five years away from hitting the iceberg.”

Weston believes the city’s precarious position demands a tough policy. “We need to re-navigate the ship,” he said.

In the late 1980s, nearly 100,000 workers descended on El Segundo each morning on their way to work at Hughes, TRW or one of the many other firms owing its existence to defense contracts.

But since then, the work force has shrunk steadily. Some estimate that fewer than 60,000 workers now make the commute to and from El Segundo each day.

City officials fear the next blow could come from Hughes Aerospace and Electronics. The company plans to cut several thousand jobs next month, many of which could come from its military and electronics system plants in El Segundo.

The decline in workers continues to take a toll on the city’s small machine shops, cleaners and burger stands, many of which have closed in recent years.

Last year, the city’s business license revenues--based on a firm’s square footage and number of workers--totaled about $11 million, almost $1 million less than in fiscal 1991-92. Business license tax revenues were projected to bring in about $9 million next year.

City officials hope to fill the void created by the aerospace exodus with a variety of industries, including electric car, solar power and telecommunications.

“The scary part is exactly how to do that,” Weston said.

The City Council recently voted to hire an economic development manager to oversee the city’s plan to attract new businesses and retain successful firms in El Segundo.