Richmond city officials cut about $7.5 million from this year's budget but avoided layoffs for now amid a revenue decline they did not see coming three months ago.

The City Council on Tuesday directed the city manager to meet with employee unions and study cost-saving options, such as furloughs and closing City Hall one day a week, to prevent laying off 24 workers.

"We can find some savings," Councilman Nat Bates said before an audience of city employees pleading for their jobs.

The approved budget cuts, which include 21 early retirements and eliminating dozens of vacant positions, will mean fewer people to do the city's work and carry out public services. Among other changes, recreation programs will be scaled back, and an anti-violence art event held in the Iron Triangle last year will be canceled.

Richmond adopted a balanced budget in late June, but falling revenue combined with a recent court ruling in favor of the Chevron refinery has officials revisiting the numbers.

"We were very conservative," City Manager Bill Lindsay said. "We expected bad, and we got terrible."

Assessed property values fell 16.1 percent, meaning the city receives less property tax revenue. Sales tax revenue dropped 12 percent. Property and sales tax are vital in Richmond, representing more than half of general fund revenue.


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In early July, a Contra Costa Superior Court judge ordered construction to stop on new equipment at the Chevron refinery because the environmental impact report for the project is inadequate. The halt means the city will not receive revenue from permits Chevron still needs — revenue the city was counting on to keep the Planning Department afloat until the depressed construction market rebounds. The ruling also means the city will not get $1.8 million for police, job training and other programs that Chevron was to provide under a related agreement.

Those losses total $8.7 million, said Jim Goins, city finance director.

"It's something that could snowball," Lindsay said. "It's a problem now that we feel we can manage, not without some difficulty. If we don't take steps, it will start to manage us."

Officials will eliminate vacant positions to save $2.8 million. Early retirement for 21 people ranging from accountants to gardeners saves $874,000. Travel, training, contracted services, new equipment and other costs will be cut.

Some questions remain about the city's finances. Councilwoman Maria Viramontes inquired about $13 million the city received as partial payment in a $28 million settlement with Chevron over unpaid utility taxes. Goins said the city spent the money on police-related costs and to compensate for revenue losses. He said he would provide a detailed accounting at a later meeting.

The picture is equally bleak when it comes to the city's redevelopment arm. The redevelopment agency, which transforms blighted and underused areas into viable developments, is being pummeled by declining property assessments and the state's decision to take $10 million locally to backfill its deficit, said Steve Duran, community economic development director.

Officials must slash expenses by 41 percent, Duran said. In addition to possible layoffs, the agency is considering delaying and cutting projects and will present the council with a list next month.

Residents worry about the cuts' impact. Nonprofit groups that help the poor get support from the city and cuts to staffing and services will have a ripple effect, they said. In addition, East Macdonald Avenue and the section from the BART station to Harbour Way got a face-lift, but neighbors wonder when plans on the west end will materialize.

"The street needs a lot of repair," said Karsa Miles, president of the Atchison Village Neighborhood Council. "I just want to make sure that section of Macdonald is not forgotten."

Follow Katherine Tam on Twitter at www.twitter.com/katherinetam.