Next up: possible salary and benefits cuts.

Tracy’s budget deficit is expected to grow to $9 million for the fiscal year that ends June 30. While the city has started to pare down its workforce with layoffs, those proposed cuts are expected to save the city only about $6.5 million.

The City Council, administrators and other city workers hope the economy turns around and sagging tax income rises so further cuts are unnecessary.

But city officials are already eyeing decreases in wages and benefits for city workers, which make up the vast majority of costs to the city’s roughly $45 million general fund.

In fact, with dwindling revenues, there might not be enough money in city sales tax and property tax coffers to pay for workers just in the police and fire departments.

That could force the city to dip further into its reserves, and the council has already given the go-ahead to ask voters for a special property tax to pay for public safety.

The cost for the police and fire departments are estimated this fiscal year at $23 million and $16 million respectively, a combined 14 percent increase from the previous year.

Meanwhile, property tax and sales tax income for Tracy are falling well below the city’s summer projections of $27 million and $13 million.

Tracy has been using reserves to close its budget gap and still has about $25 million the bank, though it wants to maintain about $15 million in reserves, officials have said.

While the police officer and firefighter unions are talking to city administrators to save money and perhaps jobs, it remains to be seen whether those talks can prevent future cuts to employee incomes and benefit packages.

Fire Chief Chris Bosch said this week that his department will try to reduce overtime, which helped push the annual income of 75 percent of firefighters to more than $100,000 in the most recent fiscal year — a 25 percent jump from the previous year. Overtime cost Tracy $2.9 million overall last year, which went overwhelmingly to firefighters and police officers.

Already, there’s talk about police officers foregoing a 5 percent July pay increase called for by their union contract, and Tracy Finance Director Zane Johnston has said the city might look at 5 percent pay cuts for city workers at some point in the future.

Eight days when city workers stayed home without pay this fiscal year will save the city money by eliminating planned cost-of-living increases for Tracy employees, but except for department heads, who took actual pay cuts, no workers have seen their paychecks reduced.

That could change.

Johnston called the amount of money the city puts into police and firefighter retirement plans “unsustainable financially.”

For each dollar Tracy pays an officer or a firefighter, it puts 33 cents into the California Public Employees Retirement System. When health care expenses are included, it costs Tracy 50 cents in benefits for each dollar that’s paid to an officer or firefighter in salaries and wages.

Johnston said he expects the city’s CalPERS contribution to rise to 35 cents by 2011, when retirement rates are recalculated.

Police officers are able to retire at age 50, with 3 percent of their salaries added to their retirement payout for each year they’ve been employed, not including overtime pay, for a maximum retirement income of 90 percent of their salaries.

For firefighters, the formula is 3 percent at age 55.

The city can afford neither formula over the long term, the finance director said, and workers will likely be asked to contribute to their own retirement plans so the city can balance its budget.

Time will tell whether city officials will cut back on other benefits.

Tracy spends about $1,200 per month per employee for health insurance, an annual cost of roughly $6 million.

Even most first-year city employees get 37 paid days off a year counting sick leave, while the minimum for department heads is 53 paid days off a year. The exceptions are firefighters, who are paid for 13 holidays they work that other employees get paid to take off.

The head of Tracy’s personnel department, Maria Olvera, said she didn’t know the average number of sick days taken by city workers.

Tracy employees accrue unlimited unused sick leave, which, for workers who retire with Tracy, is paid out by the city and put into an account employees can use to pay for health care during retirement.

“Tracy is a very good place to work,” City Manager Leon Churchill said several weeks ago.