NIAGARA FALLS – Mayor Paul A. Dyster proposed a 2013 city budget Thursday that included 20 layoffs and the first substantial property tax increase since 2006.

“I call it a disaster budget,” Dyster said, placing the blame on the dispute between the Seneca Nation of Indians and the state over casino revenues, which has cost the city $60 million in revenue it was hoping to have received.

The budget calls for increases in property tax rates of 8.3 percent for homeowners and 5 percent for businesses.

The layoffs include the equivalent of 27.5 full-time positions, but nine are vacant or expected to be vacated as a result of upcoming retirements.

Others are part time, so the number of individuals to receive pink slips is 20.

Spending in the general fund, the area of the budget supported in part by property taxes, was reduced by about $2.6 million, to $83.7 million, even with an increase in the tax levy of $2.47 million.

The 20 pink slips would include 12 from civil service positions, four hourly workers and four appointees exempt from civil service regulations.

City Council members vowed to retain all the threatened jobs and eliminate the tax increase.

“An 8.3 percent [homestead] tax increase in a city where home values are falling is unacceptable,” Council Chairman Sam Fruscione said.

“To be honest with you, I’m pleased with the outcome of the budget,” Councilwoman Kristen M. Grandinetti said. “It’s been a long struggle to get this far, and unfortunately, we all have to bear the weight of this problem with the casino.”

Dyster said a crucial side effect of the layoffs is the result of a union contract provision that bars the city from hiring any temporary or seasonal workers while any full-time hourly employee is on layoff.

He said that means the city must eliminate 82 seasonal slots, which will hurt summer programs, from street paving to lifeguards at municipal swimming pools. Those cuts will save $487,000 in payroll costs, however.

Dyster said he expects an arbitration process between the state and the Senecas will result in a settlement sometime next year.

But he included only $5.37 million in casino money in the budget, saying that was the “conservative” way to go.

“The delay in the delivery of casino revenues has been a catastrophe,” he said.

Dyster said the city’s property tax collections have been basically flat since 2006, while expenses have risen nearly $20 million during that period.

Ferris J. Anthony, president of United Steelworkers Local 9434, the largest city employee union, was angry that Dyster’s proposed layoffs didn’t include any police or firefighters.

“I don’t know the answer, but it has to be fair across the board, and it’s not,” Anthony fumed.

Dyster said, “We did a legal analysis of every union.”

He said the terms of the federal grants the city accepted in recent years to hire five more police officers and eight more firefighters barred any reductions in those forces until a year after the grants run out. He said cuts in police and fire would not be legal until 2014.

“I, of course, hope we can restore all of those positions,” Grandinetti said, “but I think that we are looking at this tax increase in a negative way. We have been under the [state’s 2 percent tax] cap for years, and [an increase] makes sense if it can keep us afloat until we resolve some issues.”

Councilman Glenn A. Choolokian said the city has been mismanaged.

“Over $100 million was collected from the casino [before the impasse]. They blew every nickel,” Choolokian said. “We’re worse now than we were 10 years ago.”

The Council scheduled a public hearing on the budget for 7 p.m. Nov. 13 and budget resolution meetings for 4 p.m. Nov. 27, 28 and 29.

The legal deadline for the Council to complete work on the budget is Dec. 1.