MADISON, Wis. -- Madison homeowners could face a tax hike under a budget proposal that Madison Mayor Dave Cieslewicz announced on Tuesday.

The plan, which comes on the heels of a proposed $38 increase in Dane County property taxes for the average Madison homeowner, would include hiking city taxes $70 next year -- a 3.8 percent increase in taxes on the average $245,000 home.

Cieslewicz unveiled his 2010 budget proposal Tuesday morning, saying that it preserves city services without layoffs or wage cuts.

However, the plan counts on city employee unions agreeing to a 0-percent pay increase in each of the next two years.

Already, the firefighters union Local 311 has agreed to no pay increases for the next two years with a 3-percent increase at the end of the contract. The 3-percent hike at the end of 2011 would let the union starting bargaining a new two-year deal at the same wage level that likely would have occurred -- 1.5 percent hikes in 2010 and 2011, WISC-TV reported.

"We think that this is the route to go. We don't want the city to dig (itself) in a bigger hole and try to come up with raises for the employees. We do pretty well in the city," said Joe Conway, president of the Firefighters Local 311.

The mayor said he's hoping other unions accept the same deal. The mayor claims he has already gotten a "favorable response" from the city's 12 unions

Lisa Olmsted, the city of Madison secretary, is one of Madison's 2,700 workers escaping big layoffs in exchange for a two-year wage freeze and a voluntary furlough.

"I think that if there are people who can afford to take furlough days or unpaid days that would be awesome. Not all of us can afford tot do that, including myself, but I feel very lucky to have a job with the city," Olmsted said.

The mayor's plan gives 500 non-union city workers, including himself, no pay hikes over the next two years. He wants 2,200 union workers to accept the same.

The proposed operating budget increases spending one-half percent -- the lowest in 15 years.

"We're not slashing things. We're not increasing taxes to a dramatic extent. There's a steadiness about it. We're maintaining services," Cieslewicz said.

As part of the budget, some city services would be scaled back. Large-item curbside pickup would be done every other week as opposed to weekly and there would be no scheduled brush pickup, only random pickup.

The budget contains no new initiatives, but the budget blueprint does allow the Madison Police Department to take four police officers out of the municipal court and use them for crime prevention and gang initiatives instead of security detail. The municipal court security would be contracted for by the city. An eighth paramedic unit would also be added.

There would be no city layoffs proposed and a hiring freeze would continue in 2010. However, city departments could request open positions by filled on a case-by-case basis.

The budget proposal includes $16 million in tax increment financing, or TIF, funds for the Edgewater Hotel project and borrowing for a new central library. New capital borrowing costs total $1.96 million.

The budget also covers a $700,000 cut in state shared revenue and more than $2 million in higher health insurance costs.

The plan cuts roughly 10 full-time positions.

The proposal will go before the Madison Common Council on Tuesday night.

Stay tuned to WISC-TV and Channel 3000 for continuing coverage.