Last year's city budget deficit was $84 million, so this year's budget has grown substantially. The mayor says he has a plan to try to avoid layoffs, but not everyone is on board.
San Jose city workers are trying to adjust to the idea of a possible 10 percent pay cut.
"It would be devastating. It's hard to live on what you make right now in this time and everybody around me is losing their job," said city worker Magie Espinosa.
At the City Council meeting on Tuesday, the city manager spoke of the worst fiscal situation in San Jose history -- a $116 million shortfall. That is more than the budget for all of San Jose parks, libraries, community centers and senior services combined.
Reed says without that 10 percent employee pay cut, there will be layoffs and some services will be eliminated.
On Tuesday, the city sent out 1,100 early notices. In some cases, those with more seniority will replace others.
"More than 1,100 people would be affected by it, but we're probably looking at the elimination of about 650 jobs, we'll have some retirements, so ultimately between 400 and 500 people would be laid off," said Reed.
Some are ready to take a 10 percent pay cut.
"Yeah, that is a viable alternative rather than a complete loss of a job," said city worker Edward Munyak.
Still, the fire fighters' union says cutting certain services would hurt the community.
"If you take any resources out of this department, you are simply going to make us respond slower than we already do and we're two minutes behind the national standard, as we stand here right now," said Randy Sekany from Local Union 230.
Reed is asking all unions representing city workers to pull together and accept the 10 percent cut, but most workers say it will hurt their families.
"Frankly they've told me they'll be out of the business of living," said Sekany.
The budget has to be balanced and in place by July 1, 2010.
