New London - A day after the City Council approved an $83 million budget - about $4 million short of what the administration had requested - the mayor said the city is facing significant layoffs and reductions in services.

The council voted to approve the 2012-13 spending plan Monday night. Mayor Daryl Justin Finizio said Tuesday that it was too early to be specific about where the cuts would be made.

"We are facing a big hit in current operations,'' Finizio said. "We're talking layoffs, and not just one or two positions. It will be felt everywhere in city government."

For instance, the Public Works Department is looking at a 25 percent decrease in its budget, he said. In the mayor's office, where the council cut about about $86,000 from the proposed $426,637 budget, no positions will be eliminated but there may be salary reductions.

"Basically, it's a reduction in the size of government,'' Finance Director Jeffrey Smith said Tuesday.

During a marathon meeting Monday night, the City Council and its Finance Committee met for nearly seven hours trying to pare down Finizio's proposed $87.1 million proposal, which would have resulted in about a 20 percent increase in the tax rate.

At the end of the night, the council approved a budget for next year that represents just over a 1 percent increase in spending. But because of about $3 million in lost revenue from the state, and the added cost of about $500,000 to absorb the school district's business department into the city's Finance Department, the tax increase will be around 8 percent.

The budget that passed Monday night, if it remains unchanged after scrutiny by the finance board, requires about a 2 mill increase in the tax rate, according to the Smith. The rate would increase from 25.31 to 27.42 mills.

The finance board will review the budget Monday after a public hearing at New London High School. The hearing starts at 6 p.m.

Voters may collect signatures to force a referendum on the budget, which must be approved by May 31.

The Finance Committee, which held meetings during the past three weeks with department heads, had a goal of keeping the tax increase to 2 percent. But on Monday, faced with new information about decreased revenue, the committee passed a $83.8 million budget, which would have increased taxes by about 9.7 percent. The City Council immediately cut an additional 2 percent.

"I don't think anyone is happy this morning,'' City Council President Michael Passero said Tuesday. "Not a single member of that council wanted to put a disproportionate burden on taxpayers. But we got to the point where we could not in good faith cut any more services."

He said the cuts are going to hurt.

"It's going to be painful for the taxpayers,'' he said. "It certainly will be painful for the departments."

Finizio, who had promised to veto the budget, or parts of it, if he felt the council was overestimating revenues, said Tuesday he believes the council did its due diligence in reviewing the budget.

"I believe as people start to see the significance of the cuts needed to meet this 8.3 percent increase (in taxes), they will recognize we have hit rock bottom,'' he said.

Councilor Adam Sprecace said if taxpayers are not happy with the budget, the discussion should focus on the size of government and what services they are willing to forego to keep taxes down.

"Ultimately, this is a government by the people and a referendum gives them the power to be heard,'' he said. "We could see further cuts."

k.edgecomb@theday.com