Villaraigosa, who leaves office on July 1, admitted to having erred four years ago in approving a 25 percent hike in salaries -- an action he said he has been trying to make up for once the national economic recession hit.

"Let's be clear. I played a role as well and I supported the 25 percent increase," Villaraigosa said. "I feel it was wrong,and we need to make up for that mistake. "

Civilian workers are scheduled for a 5.5 percent increase in January. Under his plan, the city would need to negotiate with the unions to forgo the raise. He also is suggesting there be no other raises -- including police and fire -- for the near future.

"The county did it for four years, including their sheriff's and fire departments," Villaraigosa said. "We need to do the same. I feel compelled to say there is not an anti-union bone here. This is keeping us on track to maintain our services. "

If all his proposals are followed, Villaraigosa said the city will have a $15 million surplus by 2017-18.

Unions are expected to fight the proposal, but as of Monday were still reviewing the overall plan.

Cheryl Parisi, a representative of the Coalition of City Unions, said labor leaders need additional time to study the budget.

"After looking it over briefly, we are glad to see that the mayor is putting some much-needed money back into funding critical city services such as road repair and tree trimming," Parisi said.

"Our concern is that this budget does not go far enough to protect the people of Los Angeles now and in the future. As the economy continues to improve, our priorities must be to restore, revitalize and renew this world class city ... and find new, more efficient ways for our city workers to do what they do best. "

The new budget he is proposing benefits from an improving economy, bringing in more than $100 million from sales tax, property taxes, documentary transfer tax and hotel bed taxes that help to resolve what had been projected to be a $216 million shortfall this year.

It also includes cuts by several departments in spending, salary savings and first year benefits from pension reforms on new city workers.

All of which are helping the city to have a projected reserve fund of 5.4 percent, totaling $292 million.

Villaraigosa said he wants to use that money to begin to restore some basic city services, including tree trimming, sidewalk and street repair.

"Three years ago, we were projected to have a deficit of over $1 billion, that's billion with a B," Villaraigosa said. "And billion wasn't the only B word people were talking about. They were talking about bankruptcy. None of those dire predictions have come to pass. "

If the city is to get to the point where it has a surplus, he said it will require continued fiscal discipline by the next mayor and the City Council.

"There will be voices who call for an end to the difficult choices we have made," Villaraigosa said. "And that would be to return to the old times and show we did not learn the lessons of the last four years. "

Villaraigosa is calling for a 10 percent cut in spending by the mayor and City Council offices. He has proposed a mayor's budget of $28.5 million for this coming year, down from $30.3 million, while the City Council budget would go from $16.9 million to $15.2 million.

The spending plan provides $17.9 million for the new Economic Development Department and $74.8 million in a budget for a new agency that consolidates Planning and Development, which will require City Council approval and will need several months of study before taking effect.

Villaraigosa said he is confident his proposals for the salary freezes and creation of new agencies will go through.

"I have talked with the council president (Councilman Herb Wesson) and have his assurances," Villaraigosa said, adding that the two candidates for mayor - Controller Wendy Greuel and Councilman Eric Garcetti - have campaigned on many of the same issues.

Villaraigosa's budget also maintains the Los Angeles Police Department at 10,000 officers and begins to buy back some of the banked overtime accrued by officers amounting to more than $110 million.

The mayor also includes funding to hire 140 new firefighters to staff 25 new paramedic ambulances. After attrition, it is expected the department will grow by 68 firefighters.

And, for the first time since he has been mayor, Villaraigosa proposed a sizeable increase of $10 million for the City Attorney's Office.

Councilman Paul Krekorian, who chairs the council's Budget and Finance Committee, said the budget was a step in the right direction coming after years of cuts.

"Any optimism should be tempered by the reality that we still have much more work to do," Krekorian said. "Our economic recovery is still slow and fragile and all of the gains we've made in reducing the structural deficit could be lost if the city falls back into its old habits. "

Krekorian's committee is scheduled to begin its review of the spending plan on April 30.