Sebastopol plans to balance its $5 million budget by placing city employees on a 36-hour work week, closing City Hall on Fridays and freezing pretty much everything else.

The proposed general fund budget retains the city's current staffing level of 44 employees, City Manager Jack Griffin said.

But city services will suffer, he said, with City Hall closed two additional Fridays a month and public works employees working fewer hours.

"I am happy we are not forced into a layoff scenario, but I would like to see our picture improve so we can make improvements within the city instead of just treading water," Griffin said.

The City Council will hold a public hearing on the budget at its meeting on Tuesday. The budget is scheduled to be adopted on June 27.

Griffin said that overall revenues remain flat, except for a slip in sales taxes during the last two quarters of the year. Sales taxes in other cities and regions are now increasing, a trend that troubles Griffin.

"That is a long-term concern of ours," Griffin said. "Is the trend of downward sales taxes going to continue? Have we arrived at the bottom of the recession later than other cities? If that trend continues, our problems become exacerbated."

Meanwhile, salaries, health care and pension costs continue to increase, Griffin said.

Overall, revenues are projected to be $5,005,700, compared to current budget revenues and expenditures of $5,124,262.

To reduce costs and bring the 2011-2012 budget into balance, the city is proposing to shorten the work week from 40 hours to 36 hours, saving $106,000. The plan is currently being negotiated with the city's employee unions, which represent 26 workers.

Meanwhile, salaries for department heads and the remaining employees will be frozen, Griffin said. He will take over duties of the city's administrative services officer, who has retired.

The budget would also cut the city's support of arts and nonprofit programs by 50 percent, from $47,080 to $24,000. It affects the Chamber of Commerce, Community Center, Center for the Arts, Historical Society, Rainbow House, Senior Center, World Friends and REP Theatre.

The budget also proposes taking $67,000 out of city reserves.

Police and fire services account for 77 percent of the general fund budget, higher than most cities. Griffin said the city's costs are higher because its public safety services must cover a relatively large geographical area and two state highways that traverse the city.

Sebastopol is not considering contracting with the Sonoma County Sheriff's Office, a model used by Windsor and Sonoma. Rohnert Park is studying the concept.

"It has not been raised here by the council, myself or the police chief. It is not something that we are looking at," Griffin said. "We are not convinced we will get equal or better service at equal or better cost."

The city also has a $2 million sewer budget, $1 million water operations budget, and a $2.1 million redevelopment agency budget.