Faced with seven-figure deficits for fiscal years 2010 and 2011, the city of Santa Barbara most likely will need to renegotiate with its labor unions as well as make difficult expenditure cuts in every department, officials said at Thursday’s budget workshop.

City revenues, which come primarily from taxes, have dropped significantly in the past few years, particularly in the area of sales tax.

“We lost about 11 years of growth,” finance director Bob Samario said about the 10.6 percent decline in 2009. He projected 6.5 percent decline for the current year.

With about $3.7 million to cut by the end of the fiscal year and nearly $9 million for next year, city staff members are looking at making large cuts to costs.

The city staff’s main strategy is to negotiate with labor unions, since salary and benefit costs make up 76 percent of total expenditures. According to the presentation by Samario, all staff salaries and benefits would have to be cut by about 10 percent to make up the projected deficit without additional cuts to service.

Each city department has been asked to propose cuts of 12 percent of operating budgets, with safety departments cutting 10 percent.

The Santa Barbara City Fire Department’s proposals to make up its $2.1 million share — namely, closing the No. 3 Station on East Sola Street — were vehemently opposed by the City Council.

Many members of the local International Association of Firefighters attended Thursday’s meeting, and union president John Turner urged the council not to close the station as planned, saying it did nothing to solve the long-term budget problems facing the department and the city.

No action was taken during the special budget session, but the staff was directed to delay closing the station for now — at least until the matter could be further researched, through the delay could force the department to make other cuts.

“If you say don’t do the brown out for the rest of the fiscal year, our problem went up $400,000,” City Administrator Jim Armstrong said.

The station was proposed to close March 1 to start reaping the savings of about $3,000 per day from reduced overtime costs.

Response times could be affected, but the department hopes to utilize fiscal challenges as a chance to look at its coverage and how it does business, Fire Chief Andrew DiMizio said. Average response times are 3 minutes and 13 seconds for the city.

Police Chief Cam Sanchez said cuts will not affect the patrol officers, as keeping response times low is the No. 1 priority. However, the department is planning to vacate its leased building across the parking lot from the main Figueroa Street building to save money, and it most likely will keep at least seven positions vacant for the rest of the fiscal year.

Crime has increased recently, especially burglaries, in the past year or so, Sanchez said.

Departments will continue to present ideas for cuts through March, but some of the others ideas so far include closing parks and other facilities; canceling subsidized after-school and youth-related programs; eliminating the adult sports league; and reducing City TV programming, library hours and zoning enforcement.

Most cuts to service are a result of lost positions, Armstrong said.

There were 37 vacant positions eliminated from the budget for the 2010 fiscal year, and 79 positions — 53 of which are filled — may be cut next year.

None of the council members reacted favorably toward the idea of additional taxes, but some said voters at least deserve the choice. Armstrong said possible taxes to include on the ballot are a single-use bag tax, a library parcel tax, an increase in sales tax and a legally questionable medical marijuana dispensary tax.

— Noozhawk staff writer Giana Magnoli can be reached at gmagnoli@noozhawk.com.