With time running short and few agreements with employee unions to help close a $115 million budget gap, San Jose officials next week will notify more than 600 city workers — from police officers to librarians — that they may lose their jobs by the end of June.

The city may see even more layoffs than last year, when it slashed 713 positions and 215 employees were laid off to close a record $118.5 million deficit. Layoff totals won’t be clear until June, but the city currently has few vacant jobs to cut.

“These decisions are not taken lightly,” City Manager Debra Figone said in a notice to employees this week about the looming layoffs. “But the current state of our revenues and expenditures are such that significant reductions are simply unavoidable.”

The City Council had sought 10 percent pay cuts and agreements to reduce pension and other benefits to help close this year’s gap and shrink deficits in the next several years. But only four of the city’s 11 employee unions have agreed to the requested salary cuts, and the city has been unable to reach accords on reducing costly perks and pensions.

Figone said that her proposed budget, scheduled for release May 2, will require eliminating more than 600 positions citywide. That includes 220 employees temporarily funded last year only through June. Some 230 additional workers are expected to be “bumped” into lower-paying positions now held by more senior colleagues whose jobs are cut.

Blaming management

Employees say that while they’re fearful of losing their jobs at a time when “Help wanted” signs are scarce, they don’t buy San Jose’s poor-mouthing and feel they’ve been scapegoated by free-spending city leaders.

“I think everyone’s concerned about their job,” said Gerry Chappuis, who monitors contracts in the city’s public works department. “I love my job and the city. Workers aren’t being laid off because of lack of work. They’re being laid off because of lack of good management.”

But Mayor Chuck Reed said the city’s money woes are all too real and that workers are making things worse for themselves by digging in their heels.

“With the budget coming out in a week, we’re not making progress, and that will mean additional job reductions,” Reed said, adding that he may seek a November ballot measure to curb pensions and other perks.

In his budget proposal last month, Reed said the city must draw the line on costs to maintain existing staffing and services. Doing so, he said, will require reducing current retirement benefits, from which rising costs have helped drive 10 straight years of budget deficits. Annual costs for allowing retiring workers to cash out unused sick leave have more than doubled in the past five years, from $6 million then to $14 million last year.

The city has accepted offers from firefighters and three other employee unions for 10 percent pay cuts. Those unions also agreed to talk about changes to retirement benefits and other perks, but no deals have been reached. The city has declared an impasse in talks with six other unions and made no progress in talks with police.

Fixing future deficits

The council can vote to impose pay cuts for one year on all employees except police and firefighters. But even if all the workers accepted the 10 percent pay cuts, the city would still face a $77 million budget gap.

Securing changes in retirement and other benefits is more difficult, particularly for current workers, who argue that the benefits are a vested right and can’t be revoked.

Reed said retirement changes would do little in the current budget, as the city’s pension bill is determined by independent boards each year. But, he said, it would ease future deficits.

San Jose faces shortfalls totaling more than $183 million over the next five years as employee costs outpace revenues. Pension costs are a major factor, increasing from $193 million in the upcoming budget to more than $304 million by 2015.

Solving pension issue

Reed, who has won voter support for recent fiscal reform measures, said perks may be easier to fix at the ballot box than at the bargaining table.

“Some of our unions refuse to bargain with us about some of those issues, but we’ve got to save the money,” Reed said. “Some of those things would require charter changes. Some would probably only happen if voters make it so.”

Don Rocha, one of the council’s newest members, said the pension issue is “messy,” but that it may be solvable in smaller steps more palatable to unions.

“I truly believe if we got some smaller fixes, we’d see some big changes in pension fund obligations,” he said.

The city’s largest union, the Municipal Employees’ Federation, has dismissed the pension alarm as a scare tactic, contending that the concerns will ease as the economy improves.

But Councilman Pete Constant, a retired city police officer and former pension trustee, says that’s nonsense.

“I don’t know how you can look at these numbers and say it’s not a problem,” Constant said. “It’s clearly the main problem.”

Contact John Woolfolk at 408-975-9346.