New London - Mayor Daryl Justin Finizio announced Thursday that he is laying off his office administrator as part of an effort to trim a possible $1.26 million from the 2012-13 budget.

Tammy Daugherty, who had already taken a 5 percent pay cut, was given a 30-day notice Thursday, Finizio said. She was hired in December after Finizio was sworn in as mayor and earns $52,000 a year plus benefits. Her last day will be Oct. 26.

"It's a loss to the city, but I believe the cut had to be made,'' Finizio told the City Council Finance Committee Thursday night as the committee began deliberations to cut the budget.

At a referendum Tuesday, voters defeated the $42.3 million general-government budget that would have called for a 7.5 percent tax increase. The council and the mayor agreed to try to reduce the increase to 5 percent.

But reaching that number is not going to be easy.

Finizio said that in preliminary talks with department heads, he's been told there is little left to cut. He also warned that he may have to cut services and personnel later in the year if money gets tight because he will not overspend the budget.

"By pushing to 5 percent, we are pushing below rock bottom. There's a very high probability that some departments will run deficits,'' he said. For example, if there is an extra snowstorm, cuts will have to made elsewhere to pay for the storm cleanup.

He suggested the council look at cutting subsidies to nonprofits and reducing the city contribution to the public library. The city gives the library about $600,000 a year.

The Finance Committee also heard from a dozen residents, some of whom suggested places to cut and others who urged the city to cut as little as possible.

"You ought to get together,'' said Armand Beaudette, who has lived in the city since 1988. "If you cut more, this city will go backwards. You're going to dig a hole you won't get out of.''

But most of those who spoke suggested ways to save, including looking into regionalization, privatization of services and asking Connecticut College and Mitchell College to make voluntary contributions to the city's coffers.

"Let's stop threatening the citizens. Let's have the courage to do what's right,'' said Avner Gregory, who has lived in the city for 45 years. He suggested residents work together and treat everyone with "compassionate kindness."

After nearly two hours of comments, the committee began a painstaking review of the budget, but before members could contemplate any cuts, they discovered that several slight increases were needed: in the law director's budget, in the retirement account and in dues for Southeast Area Transit (SEAT).

The mayor is expected to present the committee with an amended budget on Monday that will include a $280,000 reduction due to the postponement of a merger of the school finance department with the city's. Another $500,000 could be saved after the city refinances its debt. But Finance Director Jeffrey Smith warned the savings could be less than $500,000 if there are changes in the market.

The committee will meet at 6 p.m. Monday and Tuesday to continue its budget deliberations.

k.edgecomb@theday.com