ESCONDIDO -- The city would lay off 32 employees and make substantial cuts to libraries, recreation, police and firefighting under a proposal for emergency budget reductions that the City Council is expected to approve Wednesday.

The list of proposed cuts was finalized Monday morning by the council's budget subcommittee after seven weeks of haggling and debate.

The $3.2 million in cuts, which would go into effect Feb. 1, would reduce the projected deficit for this fiscal year from $6 million to $2.8 million, city officials said.

The cuts include $516,000 from the Fire Department by delaying plans to increase staffing, $405,000 from the Police Department by freezing six positions and disbanding the SWAT team, and $219,000 from the city's code compliance campaign by reducing weekend shifts.

They also include $215,000 from libraries by cutting hours at both city branches, $196,000 from recreation by eliminating many programs, and $1.45 million from the layoffs and reduced employee benefits and salary increases.

The number of layoffs was reduced from 46 to 32 over the holidays because of some unexpected retirements and a city decision to pay some employees with money from outside grants and other sources, city budget officials said.

Assistant City Manager Charlie Grimm said there was still a possibility that layoffs could be avoided if the city strikes a last-minute deal this week with a labor union representing 187 city employees.

But Grimm said such a deal was unlikely.

Officials from the union, the Escondido City Employees Association, did not return phone calls Monday.

Escondido has seen a severe revenue drop during the economic downturn because the city's 20 auto dealers make it more reliant on sales tax than other cities.

The budget subcommittee, which includes Mayor Lori Holt Pfeiler and Councilman Dick Daniels, said Monday that the proposed cuts struck the proper balance between reducing the deficit and allowing the city to continue operating effectively and serving residents.

"It's all about surviving and still providing services," Pfeiler said.

But the rest of the council said Monday that they disagree with some of the cuts and that they are concerned about covering the projected $2.8 million deficit with money from the city's reserves, which have plummeted from $14 million to less than $7 million in the past two years.

Councilwoman Olga Diaz said she opposes the library and recreation cuts, explaining that children and families have a particularly strong need for such services during economic recessions.

Diaz suggested the city should cut more from the code compliance campaign.

She also said the council should consider using some of the $18.9 million that has been set aside to subsidize construction of a luxury downtown hotel, but that suggestion has been consistently unpopular with the rest of the council.

Councilman Sam Abed and Councilwoman Marie Waldron raised objections completely different from Diaz's.

They criticized the cuts to public safety and code compliance, and said they would be extremely reluctant to approve anything that increases this year's deficit beyond the $1.7 million approved last summer.

"Anything beyond the $1.7 million is risky for the future," Abed said.

Waldron said the city's reserves need to be going up, not down, because economic experts say recovery is still at least a year away.

Waldron said she plans to try persuading the council Wednesday that the city needs a new approach to budgeting.

"They are trying to maintain service and cut as we go, but we need a whole new paradigm," said Waldron. "We need to do budgets on a two-year cycle and be even more proactive."

Three of the council's five members would need to approve the cuts Wednesday for them to take effect.

Abed said his vote would require more cuts than have been proposed, but Diaz and Waldron said they probably could approve the proposal with some tweaking.

New details about the city's ballooning deficit were also provided Monday.

Revenue projections for fiscal 2008-09, which runs through June 30, have dropped $5.7 million since July because of a $2.6 million dip in sales tax revenue, $873,000 less in property tax, $356,000 less in business license fees and $243,000 less in hotel taxes.

Expenses for 2008-09 were expected to be $81.8 million, but the projected cuts would lower that number to less than $79 million.

The city's final expenditures for fiscal 2007-08 were slightly more than $86 million.

Contact staff writer David Garrick at (760) 740-5468 or dgarrick@nctimes.com.