RICHMOND -- Wrestling with a budget deficit that had soared as high as $20 million, city management and finance officials said Tuesday they have driven the gap down to $5.4 million, but that more painful cuts must be made.

"The bad news is that you still have a structural imbalance," City Manager Bill Lindsay told the council. "You would eventually run out of money; that's why we feel there is additional work to be done to get that down lower."

The projected 2014-15 general fund budget, which the council must by law pass July 1, stands at $138.8 million in expenditures and $133.4 in revenues, and leaves a reserve fund of about $11 million.

The new numbers represent significant progress since last month, Lindsay said, as department heads developed plans to reduce their budgets by 17 percent each. The new proposal includes deep cuts to public works, police, fire and library and cultural services departments, some of which come from deferrals of salary increases and more than 30 proposed layoffs.

But more must be done in the coming week, and it is not clear precisely who will give up how much.

"We have six labor unions working very closely with the city," Lindsay said. "The unions are very interested in avoiding layoffs."

Nearly $3 million of proposed cuts so far come in personnel, including the potential loss of 18 permanent positions in several departments, Lindsay said.

According to a staff report, the city has already wrung about $14 million from its budget, including $3.7 million from Public Works and $2.8 million from the Police Department, much of it in overtime cuts and cuts to code enforcement, which is run by the police.

The biggest reason for the shortfall was an unexpected 14.62 percent drop in property tax revenues last year, due in part to a destructive fire at Chevron's Richmond refinery in 2012, making Richmond the only city in Contra Costa County to see a decrease in property tax revenues at a time when housing prices are on the rebound. Lindsay said a $1 billion modernization project at the refinery, which is scheduled to get a Planning Commission vote next month, could generate more than $3 million in new tax revenues if approved, but the new funds would probably not come in until the next budget year.

The city's total expenditures are already down from a high of $146.4 million in 2011-12. About 780 people work for the city today, down from more than 900 in 2005, according to Lindsay.

Other cuts include the Office of Neighborhood Safety -- a novel program that looks to get violent offenders into job training or college -- which is facing a cut of about $580,000, or roughly 20 percent of its overall budget.

The range of cuts will be felt in the community, according to a city staff report. The "sister city" program with international partners will be defunded; police will not be able to always maintain minimum staffing levels and will eschew some inspections of alcohol- and tobacco-selling businesses; a fire engine or truck company will be taken out of service; and longer lines and wait times at the library, according to the report.

On the bright side, no libraries will be closed. Library closures have occurred during past budget crunches.

But more than a dozen residents spoke in opposition to cuts in the city's arts and culture programs, which could lose nearly $500,000.

Councilman Corky Boozé lobbied hard for deeper cuts to code enforcement, raising eyebrows because that department has investigated him for allegedly maintaining unlawful junkyards in the city.

"Code enforcement is hit hard, to Corky's uninhibited delight," in the proposed budget, said Councilman Tom Butt. "His solution is to lay them all off."

Boozé called the budget deliberations a "game of three-card Molly," and suggested that there should be layoffs in code enforcement to save other jobs.

Contact Robert Rogers at 510-262-2726. Follow him at Twitter.com/sfbaynewsrogers.

Reposted from the Contra Costa Times