FREEZE PUT ON HIRING AT CITY DEPARTMENTS.

Byline: Rick Orlov Staff Writer

Faced with the dramatic downturn in city tax revenues, Mayor James Hahn partially froze city hiring Thursday and put all city departments on notice to be prepared to reduce their operations.

Hahn's order does not apply to the Police, Fire and Sanitation departments, and city officials said they intend to maintain services at their current level.

A three-page letter sent to all department heads also advised them that general managers will not be receiving merit pay increases this coming year due to the local economic problems.

``The current state of the economy requires that the city aggressively control its budget expenditures,'' Hahn wrote.

``The city's economic downturn over the last six months was accelerated by the Sept. 11 terrorist attacks. This has impacted economically sensitive revenues such as sales tax and hotel tax. Consequently, the city must exercise strong fiscal prudence at this time.''

As a result, he said the city's reserve fund - at $100 million when he took office on July 1 - is down to just a few million dollars. In addition, projections are now that the city will take in $71 million less this fiscal year than had been projected.

Hahn was in Washington, D.C., on Thursday, attending the U.S. Conference of Mayors. But he signed off on the plan that has been in the works for several weeks, aides said.

The mayor said his top priority remained public safety and security and that he was exempting the Los Angeles Police Department from the freeze on hiring new officers. Also exempt is the Los Angeles Fire Department and Bureau of Sanitation.

However, he said, all other management positions now vacant will go unfilled and that will be extended to include other administration positions in November.

In December, Hahn said he will look at extending the freeze to other jobs.

Hahn said he also has instructed City Administrative Officer Bill Fujioka to meet with each department head to explore ways that operations of each department can be cut back to achieve savings.

``What we are trying to do is find ways we can cut costs without reducing services,'' Fujioka said. ``We think there are areas where savings can be achieved without affecting the programs we provide to the public.''

Hahn said he also will require each department head to submit monthly status reports on their budgets, and new spending will be allowed only if it is for life and safety issues.

The mayor's instructions apply to all city departments except Airports, Harbor, Water and Power, and pensions, which operate independently.