Battling a potential budget deficit of $8.2 million for next fiscal year, city officials are gearing up to make more cuts and possible layoffs to keep the city in the black.

City staff is developing the budget for fiscal year 2009-10, and based on budget projections presented to the City Council last month the city anticipates taking in $57.3 million in revenue next year and spending $65.5 million in expenditures, Assistant City Manager Dan Paranick said.

Those numbers, however, are subject to change with shifts in the economic landscape on the national, state and local levels.

Paranick said the city is predicting no growth as well as significant decreases in its four major revenue categories: property tax, sales tax, development fees and gas tax.

At the same time, the city's costs to pay its employees' salary, health benefits, workers' compensation and retirement plans are going up.

With expected revenues being lower than expenditures, the city's budget staff is working hard to close the multimillion dollar gap, looking at all areas of the general fund to shave costs and be more efficient.

"The city needs a multifaceted approach to solving the budget gap," he said. "We won't get it all from one place."

And yet, because the city has already been making do with less, including not filling vacant positions, it becomes increasingly difficult to tighten the fiscal belt without considering layoffs.

City Manager Mike Sedell said he is committed to bringing the council a balanced budget to adopt on June 15 without having to touch the city's reserves.

"This isn't Armageddon in terms of city finances," Sedell said.

While it may not be the end of the world, the city manager— who usually has a "cautiously optimistic" perspective—said the fiscal climate does dim one's optimism.

"We are in far better shape than 98 percent of the cities in California, but it is important to recognize that because of the economy there are severe impacts to the organization," he said.

The city has for months been in closed session negotiations with the Service Employees International Union, the Simi Valley Police Officers' Association and a group that represents independent city employees, talking pay, benefits and layoffs.

Sedell said that during these discussions the city has asked employees in each organization if they would rather have furloughs or cutbacks in pay and benefits to save their fellow employees or if they would rather see layoffs.

The meetings are closed to the public and the press.

Because the city has already left 82 positions unfilled, Sedell is hopeful that layoffs won't be necessary, especially since city employees are already working harder than before to deliver the same level of service.

But he didn't rule out the possiblity of layoffs.

The city is also looking at cutting back in areas where the workload has diminished, such as building construction, as well as possibly moving employees from a position with less of a workload to a vacant position where they are actually needed, Sedell said.

He added that no one is above potential cutbacks—including management—and that each of the labor groups will be affected equally if there are any acrossthe-board kinds of cuts.

Though Sedell said he is confident that the city can make its expenditures meet revenues for the next fiscal year and survive relatively unscathed, he is worried about the long-term effects of the economy on the budget.

He said all local governments are facing a "structural imbalance" right now, caused by increases in certain rates and categories that are out of line with revenues that are coming into the city.

While the city is looking for longterm solutions to the problem, he said the issue won't be resolved by June and that it may require state action.

In the meantime, members of the City Council said the city must look at entrepreneurial ways to increase its revenue streams, such as building attractions that bring in tourist dollars, tapping into the city's natural resources such as reclaimed water or further promoting the Shop Simi Valley First campaign.

"We need to be responsible protectors of (residents') money," Councilmember Glen Becerra said. "We can't become a bloated, outdated, oversized government bureaucracy."

Looking to the future, Sedell said the city can maintain a healthy financial environment as long as it keeps practicing a doctrine of "fiscal conservatism"— or not spending more than you take in.

"We are trying to make sure our organization is as lean as it can be and at the same time continue the services that citizens expect," he said. "Our goal is to have the residents of the city see and feel the least impact possible from the cuts that take place, to make them as invisible as possible." • City officials are planning for a potential budget deficit of $8.2 million for next fiscal year. • Contract negotiations have been going on for months between the city and the unions representing the police and city employees. • The city has asked employees in each organization if they would rather have furloughs or cutbacks in pay and benefits to save their fellow employees or if they would rather see layoffs.