SAN JOSE (BCN) -- Starting budget talks early in an attempt to patch together a  $96.4 million budget deficit for next year, San Jose City Council members  hope to distribute the funding squeeze evenly between taxpayers, city workers  and service cuts.

In a special meeting Thursday to address budget issues, the  council approved a plan to meet one-third of the gap with wage or benefit  reductions, a third with increased taxes or fees, and the final third with  efficiencies or reduced services. The final plan combined elements of  proposals from Mayor Chuck Reed and Councilwoman Nancy Pyle.

The city manager's office will develop proposals for the new  sources of revenue, and apply the guidelines approved by City Council as it  begins contract negotiations with nine of the city's 11 employee unions,  according to Michelle McGurk, spokeswoman for Mayor Chuck Reed.

Meanwhile, the council will continue discussing exactly what form  those service reductions will take. While this is somewhat of a catchall  category, McGurk said that reducing services often equates to layoffs. If,  for instance, the public votes down a proposed sales tax increase, or union  negotiations do not yield the desired reductions, "you make it all up in  those service cuts," she said.

The council usually begins these discussions in January, according  to McGurk. The group started work on the 2010-2011 fiscal year budget early  because "we can see from these early indicators that things are not looking  good for the year ahead."

The national recession has driven substantial drops in both sales  tax and property tax revenues for the city. The state has also dipped into  resources of San Jose and other municipalities in an effort to address its  own budget woes.

The early start on budget talks will also be helpful given the  bulk of contract negotiations the city faces in coming months, McGurk said.

The budget guidelines approved Thursday are just the first step of  many before the final budget will be approved in June.

On Monday, the group will meet again in their capacity as the San  Jose Redevelopment Agency Board to discuss revisions to this year's operating  and capital budgets given the grim economic climate.
 
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