On March 19, 2003, City Manager Isiah Turner announced layoffs affecting 59 full-time employees and plans not to fill another 32 vacant positions in order to close a $3.7 million deficit in FY 2002-2003 and a looming $7 million deficit in FY 2003-2004. This is nearly 12% of the City's approximately 800 full-time positions.

The budget deficits result partially from reduced tax revenues and reductions in transfers of state funds stemming from the economic downturn. A major contributor is also labor costs, which constitute approximately 80% of the City budget. Public employee unions have fought hard and successfully to achieve enhanced retirement benefits and salary guarantees that place them among the highest compensated municipal employees in the United States (See City Faces Daunting Economic Future by Funding New Retirement Plans, E-FORUM, December 15, 2002,  http://www.tombutt.com/forum/021215b.htm).

A leaner but highly compensated City staff has emerged, and from them the city manager expects much: "Equally important during this time is the need to continue to provide the citizens of Richmond the best quality services they so rightfully deserve. To this end, it is expected that we will conduct ourselves with the highest degree of professional decorum and courtesy, consistent with the City's motto of 'pride and purpose'"

Hit hardest were the "middle managers" in a number of departments, including the City Manager's Office. Priority was given to preserving services in public safety (Police and Fire), abatement and code enforcement programs, Recreation, and those services that are intended to be self-supporting through fees, such as Building Regulation and Planning.