More than 50 City of Milpitas employees will be laid off, city departments and programs reorganized, and parks and street maintenance work outsourced in order to close a projected $9.2-million general fund shortfall next fiscal year, beginning July 1.

In response to layoffs, Milpitas Public Works Department crews and members of their unions loudly protested Tuesday night outside Milpitas City Hall. They whistled, chanted slogans, carried signs and loudly beat a large drum under the shadow of a giant inflatable rat named "Tom," referring to Milpitas City Manager Tom Williams.

During Tuesday's special Milpitas City Council meeting, Williams reiterated the latest cuts were unavoidable and beyond the city's control -- mainly due to the loss of redevelopment agency monies.

"This year has been the most painful and difficult in the history of Milpitas," Williams said. "For the last three years I've come before you and told you the same thing, but this year is the worst by far."

Based on the city manager's recommendations, the council voted 4-1 Tuesday, with Councilman Armando Gomez dissenting, to approve the city's total budget of $105 million for the 2012-13 fiscal year. The vote approves a $61.6-million general fund budget and adopts measures to reduce staff costs by $1.8 million based on employee attrition and reorganization of services among city departments; and implement layoffs of 52 positions (largely in Milpitas Employees Association and Milpitas Supervisors Association) through nearly all city departments. That represents about 14 percent of the city's full-time workforce.

The city says outsourcing will save $2.1 million annually.

In addition, the city will restructure various programs like Milpitas Rainbow Theatre, the Milpitas Teen Center and discontinue funding extended hours at the county-run Milpitas Public Library, expected to save $700,000. The city will also borrow $1.3 million from its equipment replacement fund; reduce the city council's compensation 10 percent and eliminate the council's medical coverage upon the next election, creating a cost savings of approximately $80,000.

The council also approved the city's capital improvement budget of $12.48 million.

According to Williams, the blow to the city was the statewide elimination of redevelopment agencies that he claimed hit City of Milpitas' general fund for $7 million annually.

To cut costs, city departments will reorganize.

As part of the council vote, the city's parks division was transferred to the public works department, while the city's recreation division was transferred under the human resources department.

Milpitas Police Department will see three police officer vacancies defunded; eliminate the youth-oriented Character Counts program (similar to D.A.R.E.); maintain a current vacancy in the department's investigations unit; and transfer one of the two school resource officers at Milpitas High School back to street patrol, among other cuts.

The city's recreation department will also see reorganization.

The youth Rainbow Theatre program will likely contract out two existing permanent positions for director and set designer (likely with the same employees), according to Carmen Valdez, the city's interim parks and recreation director.

The program will also use $23,500 -- some of which was donated by corporations following outreach from Councilmembers Althea Polanski and Gomez -- toward paying royalty fees for stage productions. The theater program will maintain three shows per year, but will see participation fees for residents increase, likely from $100 to $130.

The teen center will also see changes, and could close by July 1.

Valdez said the city is still attempting to contract out teen center services to the YMCA or the Boys & Girls Clubs. However, Valdez said outreach to both groups had not yielded results.

Valdez said an alternate program for teens, ages 12 to 17, may include something like Milpitas Unified School District's "After the Bell" program to be held at a school site.

Although many of the proposals to see City of Milpitas' operations and services reorganized, outsourced and downsized had been looked at by city officials since February, an outside consulting firm had reaffirmed many of the suggestions.