Looking to slash payroll costs in a disastrous budget year, Los Angeles Mayor Antonio Villaraigosa and the City Council have thrown their support behind a new union contract that is designed to cut police overtime costs by 83%.

The city's elected officials hope the two-year contract with the Los Angeles Police Protective League will reduce overtime costs by $72 million in the next fiscal year, according to a confidential report obtained by The Times.

To reach that figure -- the equivalent of more than 1 million overtime hours -- budget officials want the Los Angeles Police Department to compensate more officers with time off instead of costly overtime pay.

Neither the LAPD nor the city's financial advisors have calculated what effect the agreement would have on police services. But Councilman Bernard C. Parks warned that a reduction in overtime would be felt keenly by residents in his South Los Angeles district.

"Parts of the city with large numbers of street crime will suffer more," said Parks, a former police chief who opposes the new contract.

The proposed two-year labor pact is one of several critical budget items that face a final vote today. The council is also scheduled to vote on a plan to let 2,400 civilian employees retire up to five years early with full benefits.

While the early retirement plan has been debated for months, the police contract has been worked out largely behind the scenes. City Administrative Officer Miguel Santana, the city's top budget official, has pushed the LAPD to reduce overtime costs from $87 million in 2008-09 to $15 million in 2010-11.

Santana said the plan will have an effect on police services but predicted there won't be an immediate drop in hours worked by police. In the short-term, hundreds of officers will likely "bank" more of their overtime hours -- accruing them without getting paid and then cashing them in years later. That raises the prospect that officers will bill LAPD for hundreds of hours of accrued overtime once they retire.

"Yes, we are kicking that can down the road. We're saving the money now and hoping we'll have the money to pay it off in the future," said Maritta Aspen, the city's senior labor relations specialist.

LAPD officials say it could take at least six months before they know how the changes will affect those who work the most overtime hours, such as homicide detectives, patrol officers who make arrests late in their shift and officers with lengthy court appearances.

"Will it affect deployment? Yes, sir. It's going to affect deployment," said Rhonda Sims-Lewis, bureau chief for the LAPD's administrative and technical services bureau. "We will have people taking more days off."

The effort to scale back overtime costs coincides with Villaraigosa's continued push to add 1,000 officers to the LAPD. Because of the city's financial woes, the mayor and the council have agreed to replace only those officers who retire or resign.

The proposed police contract drew a split vote from the city's five-member negotiating committee earlier this month. Parks and Councilwoman Jan Perry voted against it, while Villaraigosa and Councilmen Dennis Zine and Eric Garcetti voted in favor.

A union representative did not respond to a request for comment Thursday afternoon. But other supporters of the agreement said the reduction in overtime expenses is far preferable to furloughs, or unpaid days off for officers.

"We believe this contract saves money without substantially reducing police service," said Matt Szabo, the mayor's deputy chief of staff.

The pact also provides zero pay increases and reduces the pay of newly hired officers by 20%, according to a city analysis of the agreement. The contract also calls for officers to convert excess sick time to additional days off.

The majority of the savings are expected to come from lowering the cost of overtime, which currently represents 7% of all hours worked by sworn officers.

Under the current system, the LAPD must pay overtime -- 1.5 times the regular salary -- to any officer whose bank of overtime exceeds 96 hours. The proposed union contract would lift that cap considerably, so that the LAPD would not be required to pay cash until an officer has accrued more than 400 overtime hours.

Once the contract goes into effect, officers will be urged by their superiors to take additional time off once they exceed 320 overtime hours, Sims-Lewis said. More than 2,400 officers, or nearly 25% of all sworn personnel, exceeded 400 overtime hours last year, she said.