Raleigh, N.C. — Sales tax revenues for Raleigh are down about 10 percent from normal levels, and the slumping economy is to blame. That revenue makes up about 20 percent of the city's budget.

City Manager Russell Allen said Monday the recession will leave an $18 million to $20 million deficit for the 2009-10 fiscal year, which begins July 1.

The 5 to 7 percent shortfall means a hiring freeze will continue, hours of operation for some services will be reduced and some city maintenance projects will be delayed.

Property tax revenue growth is down from 5 percent annually to an expected 1.5 percent, while permit and impact fees are half of what that have been in recent years.

Allen says the city will try to avoid layoffs, but it might have to eliminate some positions. Officials will try to shift any employee whose job is cut into an open position, he said.

"There may be some who are transferred from a department that isn't as busy, such as building and inspections, to one that is more busy,” Mayor Charles Meeker said.

Allen also suggested no raises for next year, but employees will be eligible for merit pay.

"We are going to have to make tough choices in next year's budget,” Meeker said.

Some city leaders are calling for more severe cuts.

"I think you should look at this budget the way you would look at your own family's budget. If you are not making ends meat, you don't go the movies during the weekend,” Raleigh City Councilman Philip Isley said.

Isley says he wants projects like the new Clarence E. Lightner Public Safety Center put on hold indefinitely. The 16-story, 305,000-square-foot facility would be built over police headquarters on South McDowell Street. In February, city officials estimated the construction would cost about $226 million – including $42 million in contingency funds for the unexpected, such as rising materials costs – and be completed by 2012.

So far, Allan said he has identified about half the cuts that need to be made.

The proposed budget will be presented to council in May. They are scheduled to vote on it in June.