WHEN THE Santa Cruz City Council passes its 2009-2010 fiscal year budget next Tuesday, it will usher in an agenda radically different from any since the Loma Prieta earthquake struck in 1989. Then, an unexpected natural disaster leveled buildings, crumbled roads and forced residents to sacrifice services for years to come in efforts to rebuild the community. Now, a far-from-natural financial disaster has ripped through Santa Cruz, like so many other American towns, and though buildings still stand, the devastation is undeniable.

In one short year, Santa Cruz has seen its general fund revenues drop by almost $5 million, its health care costs climb by $1 million and its expected deficit balloon to between $7 million and $9 million, depending on whom you ask. City leaders say cutting services, laying off employees and closing parks and programs is the only way to keep the town from heading toward bankruptcy. Yet in spite of the harsh road ahead, or perhaps because of it, Santa Cruzans are coming together with fresh ideas, donated time and the same spirit that rebuilt the city 20 years ago.

In the preamble to this year's city budget, Santa Cruz City Manager Dick Wilson writes: "I have been presenting budgets to the city of Santa Cruz for 30 years, and in that time I have never had anything even remotely close to the current combination of issues to address."

Sales, property and utility taxes are down. Health benefits and public safety costs are up. The state of California is in an even bigger mess, and, in an unprecedented effort to dig its way out of a $24 billion hole, may soon borrow billions from local governments statewide, including an estimated $1.6 million from Santa Cruz's Redevelopment Agency. Overall, it's a bleak picture, no matter how it's sliced, and roughly $8 million in spending cuts and layoffs are reflected in the proposed budget. Wilson soberly writes that the cuts will not be "artful, well planned, or even sustainable"--but they are unavoidable.

The hack job starts with $3.3 million in savings gleaned from layoffs of 22 full-time employees and 26 part-time positions, already imposed and spread among more than a half-dozen city departments. Those city employees lucky enough to keep their jobs will suffer a 10 percent pay cut, shortening their work week to 36 hours for a savings of more than $4 million. Yet even with the reductions, city planners warn that more cuts could be on the way. Says Assistant City Manager Martin Bernal, "It's certainly possible that we will need to make further concessions as the year goes on."

What this means for Santa Cruzans is that they can expect longer lines in city offices and "closed" signs on Fridays as the citywide four-day workweek becomes the norm. Look also for private companies to take over city-run operations like De Laveaga Golf Course and the Civic Auditorium. Expect fees to increase for parking and building permits. And look for more parks to be threatened by closures.

Santa Cruz's Parks & Recreation Department already employs 50 fewer people than it did eight years ago, and has laid off nine full-time workers and 24 temporary workers this year. The mood at the downtown P&R office is glum, and department director Dannette Shoemaker has called 2009 "the saddest year for parks employees and the residents who depend on their services."

Yet not every city service is on the chopping block. The Santa Cruz Police Department is fully staffed for the first time in more than a decade, and, along with the fire department, will actually see a modest increase to its annual budget. And through largely failing on its task of increasing revenues, the city was able to earn an extra $1 million by charging rent for land at places like the municipal landfill, water department and other city-owned properties that had been leased rent-free, until now.

Wilson, Bernal and Mayor Cynthia Mathews are hoping the city will recover in a year or two, but each agrees that no Santa Cruzan will escape some effect of the budget crisis. "We have to operate with the revenue we have, period," says Mathews. "The fact is, this will take a considerable toll on the city and on every resident."

In the midst of this financial drama, Santa Cruz has turned to the goodwill of its residents several times. Through charity of time and money, places like the Beach Flats Community Center and the Surfing Museum have been saved from closing, and Harvey West Pool has kept lifeguards on the watch. About eight weeks ago, city leaders openly tapped the ideas of their constituents by setting up a website that provided information on the budget and a way for residents to offer suggestions and vote for their favorites. Shane Pearlman and Peter Chester, two local Internet entrepreneurs, donated their time and expertise to work with Santa Cruz Economic Development Coordinator Peter Koht and Mathews in creating budget.santacruzcityca.gov, a website loosely based on President Obama's hugely successful campaign website and the San Francisco internet phenomenon change.org.

"Santa Cruz is a community that's masterful at finger-pointing," says Pearlman. "The site attempted to rephrase the dialogue from finger-pointing to coming together."

Users of the site are given a limited number of votes and an unlimited ability to suggest ideas. Other users can then view the ideas, vote for them and make comments, creating an easy-to-track dialogue that residents can follow from their couches.

With 214 votes, the most popular suggestion from residents was to "Coordinate Public Services with other Local Jurisdictions." Mathews, who responded to numerous user-submitted suggestions, wrote that the city already consolidates services like libraries and wastewater treatment with the county, but says she is looking into doing the same with fire services. Other suggestions posted on the site, like "Analyze Efficiencies Within City Systems" and "Limit Police Department Overtime" were officially "accepted" by city leaders.

"For the most part, we gained a lot of valuable insight from the website," says Mathews, who will be implementing some of the website's functions when the Santa Cruz unveils its new official city website in the coming months. "There were a number of instances where the comments were in line with programs we were already investigating. The suggestions that were accepted we plan on moving on in the coming year, if we haven't already."

George Sisson was a frequent user of the site. A recently laid-off former Santa Cruz IT support technician, he's felt the budget crunch as directly as anyone. He says that being able to voice his ideas online and show support for others is a major breakthrough for local government, although, he reminds, there is still nothing like the real thing,

"I think there is no substitute for real time interaction at a City Council meeting," he says. "But for people who are too busy, this website is great for keeping tabs on what's going on and for feeling connected."

Yet no amount of cutting-edge Internet technologies will make the pill of a slashed city budget any less bitter. The road back will be long and marked by sacrifice, just as it was after the earthquake. And when the work is done and the city of Santa Cruz recovers, it will likely be a different place from the one we live in now.

"We can do it, though," Mathews says. "It's just going to be painful."

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