Mayor wants wage and benefit decreases from workers but needs the support of his powerful union allies if he is to run for governor.

As Los Angeles Mayor Antonio Villaraigosa prepares to give his State of the City speech today, he faces a challenge that could define the rest of his tenure - how to close a half-billion-dollar gap in the city budget while preserving the support of public-sector unions that have played a major role in bankrolling his campaigns.

For Villaraigosa, a former union negotiator, the problem is more politically acute because he has eyes on the governor's office. The steps he may need to take to govern the city risk angering the powerful public employee unions whose support he would need for the governor's race.

Already, with revenues dwindling and taxpayers in no mood to reach for their wallets, Villaraigosa has asked city workers to give up a slice of the wage increases they won earlier in his watch - part of an agreement one union called "the best contract in 40 years." Last week, the mayor said that without concessions from the unions, he would be forced to lay off 2,800 people from the city's 50,000-member workforce.

The city faces an estimated $530-million shortfall in 2009-10 and, because of ailing employee pension funds, close to a $1-billion shortfall the year after, the mayor said in offering the first glimpse of his upcoming budget, due out April 20.

The city's police and fire unions, which are in the midst of negotiating new contracts, already have attacked Villaraigosa for trying to "cut public safety." Other top union leaders, while praising Villaraigosa's fair treatment of city employees in the past, have been reluctant to voice support for the mayor's proposal.

At the same time, Villaraigosa's critics say they've heard his tough talk before - when the mayor warned of possible layoffs last year - only to see it melt under pressure from labor.

The critics also note that a big cause of the city's money woes is an estimated $216-million increase in spending, more than half of which comes from city-employee pay increases.

The political ground is treacherous for Villaraigosa if he aspires to be governor, said Jaime Regalado, director of the Edmund G. "Pat" Brown Institute of Public Affairs at Cal State Los Angeles. He needs to show moderate voters that he has the discipline to put Los Angeles back on sound financial ground and the backbone to rebuff union demands, but do so without alienating his liberal base, Regalado said.

"Every mayor, especially this one in L.A., even though he comes out of labor and was involved in labor, is kind of in the hot seat right now," Regalado said. "He has to show some stewardship, some success managing books in bad times. Especially in this state, and in this race . . . he can't appear to be labor's captive."

So far, the mayor has been careful to avoid confronting the unions with rigid demands. Instead he is allowing union leaders to review the city's books and recommend alternatives to address the budget gap.

The "menu of options" Villaraigosa said could forestall widespread layoffs include deferring cost-of-living raises, trimming an hour off the workweek and increasing workers' own pension contributions. The savings would cover close to half the shortfall, and most of the remainder could come from possible deals to lease out the city's parking garages and meters, as well as privatizing the zoo and convention center.

"I think one thing I bring to the table, without question, is that most of them [unions] trust me," said Villaraigosa, who worked as a negotiator and organizer for United Teachers Los Angeles and the Service Employees International Union before entering politics. "They know we're not cooking the books. My goal isn't to be tough. My goal is to figure out how we can solve what is an unprecedented budget deficit."

In 2007, Villaraigosa and the City Council approved five years' worth of raises to roughly 22,000 city workers - including librarians, park employees, security guards, part-time crossing guards and city attorneys - that will cost L.A. $255 million by 2012.

Those increases have come under fire from the mayor's critics.

"When the public employees are doing so much better than the private sector, then the system is out of balance and there's a problem," said Kris Vosburgh of the Howard Jarvis Taxpayers Assn. "Part of the problem is we haven't had a mayor in three decades who's been able to stand up to the public employee unions here in Los Angeles."

Villaraigosa is no exception, he said. A major part of the mayor's environmental agenda, ridding the Port of Los Angeles of old, polluting big rigs, is in legal jeopardy because it bans drivers who are independent contractors - a provision sought by the International Brotherhood of Teamsters.

A solar energy initiative on the city's March ballot, which failed despite strong support from the mayor, would have required all work to be performed by Department of Water and Power employees represented by the local electrical workers union.

"Our entire focus in this city is to please the employees," Vosburgh said. "The taxpayers are only a second thought."

Maria Elena Durazo, head of the Los Angeles County Federation of Labor and one of the mayor's closest friends, countered that Villaraigosa has proven to be an incisive negotiator, helping to settle labor actions by hotel workers and security guards and to deliver living-wage and "green" jobs to Los Angeles.

Barbara Maynard of the Coalition of L.A. City Unions, which represents 22,000 city employees, said it was the mayor who insisted that as part of the 2007 contract, the unions be required to produce $25 million in verifiable savings. Under the contract, the unions agreed to go back to the table with the city in times of fiscal emergency to discuss the terms of the contract. Both sides must agree to any changes.

"That was a very positive step for L.A.," Maynard said. "I would say he has a really balanced approach with dealing with his employees, and that's exactly what a good manager should do."

At the negotiations, the coalition is pushing for a voluntary early retirement package as the best alternative to layoffs. A similar plan was rejected by the council last year because of the substantial financial liability it would have added to the city's ailing pension funds. Maynard said the proposal could deliver substantial savings for the city as long as those who accept the deal are not replaced with new employees.

Villaraigosa said he wants to avoid trimming positions, fearing that losing employees would force the city to cut services at a time when Los Angeles residents need them most.

But the mayor has little room to maneuver. The unions in the coalition are the only bargaining units that have a contract that allows the city to approach the unions to revisit the terms. Unions representing police officers and firefighters do not. Neither does the combative Engineers and Architects Assn., whose president warned last week in an e-mail to members that "the precedent of give-backs will haunt any union who does it for many years."

The mayor's call for "shared sacrifice" also excludes the 13,000 city workers at the airports, harbor and DWP, because those agencies operate with separate budgets.

Councilman Bernard C. Parks, chairman of the Budget and Finance Committee, said it would be foolish for any public employees union to fight an entrenched battle against concessions, even those unions with salary increases protected by contract.

"If there is no cooperation to roll back benefits, to roll back salaries, to take days off, if there is no cooperation, then it leaves it a very clear path," Parks said. "We'll have more employees than we can afford. It gets down to basic numbers."