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Staff reductions, budget cuts and reserve spending — these are increasingly familiar words, piercing the ears of corporations and communities nationwide, will not escape the city of Berkeley. 

City leaders learned this week they must prune the city’s financial ledger or they will end up $2.86 million in the hole next year. 

“On one hand, we’re probably better off than other municipalities in the county and in the state,” said City Manager Weldon Rucker, at a special budget session on Tuesday. But by the same token, there’s a problem to deal with, he said. 

City councilmembers who must decide how to address the budget problem, hearing the numbers for the first time his week, were slow to offer solutions. But employee cutbacks seem to top the list of thankless options. 

City finance officials are recommending cutting the city’s payroll by about 14 employees. Seven positions are already vacant, which means not filling them, and seven others would be selected for deletion. 

“We hope to place them [laid-off staff] in a position that is vacant and find them another job within the city,” said Paul Navazio, the city’s budget manager. 

Mayor Shirley Dean noted that the city’s staffing-reduction recommendation also left open the possibility of reclassifying other city employees at a lower pay rate. 

Prior to this week’s budget report, the city manager had asked department heads to come up with ways to reduce their budgets by five to 10 percent, in anticipation of the city’s shortfalls. 

But according to Dean, the deficits they learned about this week are greater than what was anticipated. “This was far more serious than I think we knew,” she said. 

In addition to next year’s shortfall of nearly $3 million in the city’s $105 million General Fund budget, the city is on pace to rack up a cumulative shortfall of $8.4 million by 2007. 

“Everyone’s waiting for the economy to turn around and it hasn’t happened,” noted Assistant City Manager Phil Kamlarz. 

With department-specific cuts still being studied, another budget-trimming recommendation offered by city finance officials is tapping the city’s $5 million reserve fund, of which $2 million is in loans. 

The action, which Kamlarz called a “last resort” but viable, received some criticism at Tuesday’s budget session. 

“I’m really not very comfortable with that,” said Councilmember Polly Armstrong. “What if we have a major earthquake and need extra money?” 

But while it appeared easy to say what didn’t need cutting at the meeting, it wasn’t easy to say what did. 

“We can’t say we’re not going to take any cuts and that they’re not going to be painful,” said Mayor Dean. 

City finance officials and councilmembers will meet several times to discuss where the cuts will be made before June 25, when next year’s budget must be balanced. The next budget meeting is May 14. 

City leaders attribute the budget problem to a mix of revenue losses and spending increases over the past year. 

On the revenue side, tax income on utilities and tax revenue from hotels have fallen, according to the recent budget report. 

Bogging down expenditures, among other things, is the increasing cost of labor. Workers compensation costs, medical costs, and retirement costs have all made it more expensive to employ a staff member. 

Contact reporter: 

kurtis@berkeleydailyplanet.net