RICHMOND -- A ballooning budget deficit looms over the city, raising the specter of layoffs and prompting the City Council on Tuesday to pass a hiring freeze on most city departments.

"I would hope that with our financial circumstances that this would not even be debatable," Councilman Nat Bates said. "We can't spend money we don't have. We can't fill vacant positions. This is just a no-brainer."

The freeze passed 5-2, with Vice Mayor Jovanka Beckles and Councilman Tom Butt voting no.

Beckles said she recently talked to City Manager Bill Lindsay and believed that a de facto freeze was already in place but that Lindsay needed "wiggle room" to fill vital positions if necessary.

City manager Bill Lindsay, right, during a city council meeting in Richmond, Calif., on  Sept. 10, 2013.
City manager Bill Lindsay, right, during a city council meeting in Richmond, Calif., on Sept. 10, 2013. ( Bay Area News Group)

Plunging tax revenues and difficulty cutting the budget have forced the city to draw down its reserve funds to a level below the city's minimum guidelines, which call for the city to have 7 percent of its overall budget in reserve, jeopardizing its future credit rating.

The biggest reason for the shortfall was an unexpected 14.62 percent drop in property tax revenues last year, due in part to a destructive fire at Chevron's Richmond refinery in 2012, making Richmond the only city in Contra Costa County to see a decrease in property tax revenues at a time when housing prices are on the rebound.

Lindsay said last week that the current fiscal year deficit is about $7 million, and it's expected to balloon to as much as twice that next year based on preliminary projections.

The hiring freeze, proposed by Bates, excludes police and fire positions, which make up the bulk of the city's budget. The move reflects the council's unswerving commitment, especially to the city's Police Department, which has been credited in part with drastically reducing the city's crime rate in the past few years.

"I'm not going to support any layoff of public safety, period," Councilman Corky Boozé said.

But closing the gap without cuts to public safety could be unrealistic, given size of the shortfalls. In a memo sent to the council last week, Lindsay said "it is clear that the coming fiscal year will be extremely difficult financially," and he asked all department managers in the city to prepare plans with 17 percent cuts to their budgets.

"In dollar terms, this represents an approximate $20 million in operating budget reductions," Lindsay wrote, adding that "the magnitude of the projected budget shortfall will undoubtedly affect service levels."

The city's total expenditures are already down from a high of $146.4 million in 2011-12 to $132.6 million today, according to Lindsay.

Some council members already have eyes on what they want to cut.

Boozé said he wants to focus cuts on the city's Code Enforcement Unit, the Office of Neighborhood Safety -- a novel program that looks to get violent offenders into job training or college -- and the public financing budget for public elections, which he called "political welfare."

But those three budget items represent just a fraction of the $20 million in reductions Lindsay is seeking. Proponents of those programs say they have been integral to the city's improvements in public safety and neighborhood aesthetics in recent years and have played a key role in ensuring that elected bodies include residents not funded by corporate sponsors.

"We are going to have layoffs, and people are going to be blindsided," Boozé said.

Lindsay has said "nothing is off the table" but won't go so far as to call layoffs imminent. About 780 people work for the city today, down from more than 900 in 2005.

Contact Robert Rogers at 510-262-2726. Follow him at Twitter.com/sfbaynewsrogers.