Disagreement has occurred over the city's budget for the next fiscal year.

Councilmember Claudia Billde la Peña complimented the efforts of city staff but questioned why their salaries and benefits and those of City Council members are going up while other expenses and services are being cut.

Each City Council member receives a $21,000 per year salary, plus benefits. An increase occurs every other December. The last— an increase of 10 percent—was given in December 2008.

General employees are to receive a 3 percent cost-of-living increase next January. All professional, supervisory, management and executive employees are eligible for pay raises next month of up to 8 percent, based on performance. The city manager and city attorney have separate contracts.

"With these other challenges we are facing and, undoubtedly, will be facing, we don't want to lay off anyone. . . . Would it not be prudent to take steps now in order to avoid something in the future that could really come down and hit us very hard?" asked Bill-de la Peña.

"The unions are prepared to work with us to come up with some solutions," said Assistant City Manager Candis Hong.

So far there's nothing on the budget to show where employee salaries could be cut to avoid layoffs, Hong said. Still, she added, layoffs are possible depending on the city's financial future. "I totally agree with you we have to be open to that," Hong said.

"We need to be careful that we don't have labor negotiations from the dais," cautioned City Manager Scott Mitnick.

City salaries and benefits, not including police, make up $32 million or 44.3 percent of the $72million general fund budget.

The budget doesn't anticipate any layoffs or pay freezes for city employees, but 34 empty positions won't be filled. Seventeen employees have accepted early retirement packages. Employees have agreed to a four-day furlough between Christmas and New Year's, when the city will close. Vacation days can be used. City workers get 12 holidays a year in addition to vacation days.

Last year, Mitnick's salary increased 7 percent to $228,000, and City Attorney Amy Albano's salary went up 8 percent to $203,000. Mitnick gets 40 days of vacation. Albano gets about 30 vacation days a year. The city provides vehicles for both of them. Mitnick gets an additional 15 percent of his annual salary placed into a retirement investment account. Albano gets 10 percent of her annual salary as additional pay.

The two also get medical, dental, vision and life insurance along with an extra 7 percent to pay CalPERS, a retirement plan for public employees.

Based on June 30 investment returns, the city will know in November how much CalPERS retirement funding for city employees and City Council members will cost taxpayers. The bill could be $500,000 to $1.5 million.

In 2007-08 there were 483 funded employees in the city. In 2008-09 there were 472 funded, 11 unfunded positions. In 2009-10 there are 459 funded with 23 unfunded proposed. There are 449 funded and 34 unfunded proposed for 2010-11.

A funded position is one for which the City Council budgets a salary, while an unfunded position is a position that still exists, but there's no money budgeted for the job to be filled.

The funded city positions exclude 111 positions for police, who are county employees.

"You can reduce my salary by at least 10 percent," Bill-de la Peña said during the meeting.

That proposed cut of $2,100 per year, or $175 per month, wasn't made, Adams said after the meeting.

When the council voted 4-1 to approve the budgets, with Bill-de la Peña dissenting, no cut in her salary was included in the motion.