Hundreds of city jobs are to be cut as Mayor Gavin Newsom on Tuesday directed city departments to slash salary budgets by 8 percent as he struggles with a shrinking budget for the next fiscal year.
Department heads have until March 28 to reduce salaries by eliminating jobs or cutting vacant positions. The City employs about 27,000 people.
The projected deficit for the coming fiscal year has ballooned to “well north of $300 million,” Newsom said. Reasons for the shortfall are being blamed on belt-tightening at the state level, increased costs of health benefits and contracts, and additional required spending for The City, said Nani Coloretti, the mayor’s budget director.
“We’re just going to have to be honest with people — talk about trade-offs and make the case that this is not going to be an easy year,” the mayor said. Earlier this year, with fiscal predictions for next year bleak, Newsom announced $18.1 million in mid-year service cuts in February.
This is the second time during the mayor’s tenure that he has asked for layoffs, reducing the city payroll by more than 200 jobs in 2004 when The City faced a $347 million deficit, according to the Mayor’s Office.
If layoffs are included in next year’s budget, they would be effective Aug. 22, according to documents sent to department heads from the Mayor’s Office. The projected budget deficit for 2008-09 was $229 million in November when Newsom placed a hiring freeze on city departments and asked heads to identify 8 percent in cuts as well as 5 percent in contingency cuts.
If each department cut jobs by 8 percent, The City’s general fund would see an added $70 million, Coloretti said. “We’re actually using all of the money we have in our coffers,” Coloretti said. “[We’re] using more than we historically use.”