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WINSTON-SALEM (MCT) — The city imposed a hiring freeze and spending restrictions yesterday in the face of an economic downturn that threatens to leave the city budget in a $2.4 million hole.

City Manager Lee Garrity said that, in addition to the hiring freeze, the city will freeze capital purchases, leases, and travel and training expenses. The city will review its service contracts and require purchasing to be reviewed by the city manager's office.

City leaders also have told its departments to find a way to cut discretionary spending by 5 percent.

The various spending freezes won't affect hiring for vital public-safety positions or the purchase of police cars and firetrucks, Garrity said. The city will take a closer look at any employee travel that has already been planned to see whether the trips should still take place.

City officials said that fuel expenses are walloping the city budget in two ways. Higher gas prices have officials projecting a $750,000 overrun in fuel spending, even with conservation measures that had already been put into place. Meanwhile, because the public is driving less, the state has less gas-tax money to pass on to cities, including Winston-Salem. Garrity said that the city's gas-tax revenue would be short by about $750,000.

But that's far from the only factor hitting the budget. Garrity said that the city had projected the tax base to grow by 1.5 percent, but that the growth turned out to be only 0.8 percent. The result: Property-tax revenues are falling short by some $500,000.

The city hasn't received estimates from the state on sales-tax receipts that would be passed on to the city, but Garrity said he believes that those revenues will be short by $500,000 as well.

In a typical year, Garrity said, the city counts on saving 2 percent to 3 percent of salary costs from job turnover in departments. But this year, he said, employees are staying put because of the economic uncertainly. That adds about $1 million in salary costs that the city wasn't counting on, Garrity said.

The city is benefitting from some revenue projections that are over budget and some expense savings totaling more than $1 million, leaving a net shortfall of $2.4 million in a total city budget of $173 million.

The hiring freeze means that about 150 jobs won't be filled for the remainder of the 2008-09 fiscal year, said Melissa Taylor, the city's director of human resources. The jobs are a mix of full- and part-time jobs and temporary jobs, she said. The city's entire work force consists of about 2,500 full-time positions, and another 400 part-time and temporary positions.

Taylor said that Garrity will be able to approve certain critical hires.

By freezing jobs, the city hopes to trim personnel costs by about $1.5 million, Garrity said. Add up all the cost savings from the other freezes and cuts, Garrity said, and the city will save more than the projected $2.4 million shortfall.