The city of Santa Clarita is looking to make cuts from its 2010-2011 budget to avoid an $817,000 deficit, City Manager Ken Pulskamp said Tuesday night.

“There is no doubt this is the worst economic time any of us have seen in our lifetime,” Pulskamp said at a meeting discussing the state of the city budget, where he proposed cuts that would save Santa Clarita up to $2 million.

All five City Council members attended the meeting, along with members of the Planning, Arts and Parks and Recreation commissions.

Pulskamp said since the economy “went in the tank” in 2007, the city’s general fund revenues have declined by about 16 percent.

The city’s general fund — nearly $92 million during the 2007-2008 fiscal year — has shrunk to about $77 million.  

Santa Clarita’s general fund is mostly funded by sales- and property-tax revenue, and made up about 32 percent of last year’s $250 million budget, said Darren Hernandez, director of administrative services.

The fund is used to pay for a variety of city services including police, park and street maintenance, he said.

To stay out of the red, each city department is being told to shave between 3 percent and 5 percent from its budget for next year, Pulskamp said.

Police, fire and other public safety services will probably not be making cuts, he said, but nothing is certain.

“It starts to get to the point there’s no more fat to cut,” Pulskamp said at the meeting. “You start cutting into muscle and bone.”

In spite of the poor economic projections, the city is still in a better financial situation than most California cities, Pulskamp said.

Last year Santa Clarita was forced to cut about $4 million from its general fund, he said. To do that, city officials eliminated overtime, temporary employees and money for staff training, Pulskamp said.  

About two years ago, Santa Clarita instituted a citywide hiring freeze that has reduced its workforce by almost 8 percent, Pulskamp said.

The hiring freeze saved the city about $2 million, Hernandez said.

The budget takes about six months to write and must go through a series of public hearings before it is adopted by the City Council in June. Santa Clarita will operate under the new budget on July 1.

“These are very much unprecedented times,” Pulskamp said.