morale at the city at the city of fillmore

Employee morale at the city of Fillmore is at an all time low. Threats of layoffs, benefit cuts and pay cuts due to the "Budget crisis" has gotten everyone down.
The employees (those in the union and those who are not) have been asked to prioritize which cuts would be preferrable to them. With the knowledge that if they don't cut enough some of their coworkers will be laid off.
The employees have come up with several ideas to help soften the blow of this crisis. The Town Theater loses money every year, it is very expensive to operate yet the city continues to fund it. Why? Other cities in the county don't operate theaters. The new pool, although helped by a tax to support it will cost the budget thousands of dollars to continue running at the current level of service. Other ideas to help the budget, don't fill vacant positions such as the deputy city manager,(100,000 plus) or the administrative assistant(90,000 plus) which are large dollar ticket items. These positions have gone unfilled for quite sometime.
One of the reasons morale is so low is the so called "open door policy" of the new city manager. Some people have discribed it as "an electric fence". Scare tactics continue with some long standing , hard working , employees being told their positions could be cut due to reorganization. This city manager hasn't learned. Her last job ended in controversy over very similar circumstances.
The city council who hired her have an agenda. Their ideas to cut benifits to city employees now have the oportunity to come to fruition, due to bad economic times that are at hand. But there are other ways to fix this "budget crisis", dont ride on the backs of employees to pay for bad business decisions. More home work is needed, not decisions made to help an election year.
Hiring untested new eployees while laying off long,good standing employees is just bad business (and unethical if you already know who you are going to hire) Their experience cannot be just thrown away. What happened to loyalty??