The city of Oakland handed out lay off notices to 2,500 of its employees Wednesday as part of process to try and absorb a huge budget gap caused by the pending loss of redevelopment funds.

The loss of those funds creates an annual budget gap ranging from $25 million to $30 million that the city needs to fill by Feb. 1 - the deadline for the elimination of all state redevelopment agencies.

City officials said notices were sent to 1,464 full-time and more than 1,000 part-time and temporary employees. Oakland has about 3,021 regular employees, including sworn police and fire workers, and 2,061 as-needed temporary part-time employees.

Ultimately, the city expects several hundred employees to be cut from its payroll, unless state legislators step in and extend the elimination deadline.

According to city charter, Oakland is required to give a 10-day notice layoff notice to employees in the event that their positions are eliminated as part of the budget-balancing decisions to be passed by the City Council on Jan. 31.

Redevelopment revenue funds 159 full-time positions throughout most city agencies and departments, but that money also pays for part of the salary of staff in all parts of Oakland government (including half of the mayor's salary). Pink slips will be handed to workers in almost every office in City Hall, including City Council, public works, police services and the city administrator's office.

However, Oakland charter exempts the mayor, city council members, the city administrator, the city attorney and the city administrator from layoffs, according to a press release sent out Wednesday morning. Department heads and administrators have been asked to cut 5 percent from their budget.

Sworn police and fire employees also are exempt from layoffs due to a no-layoff clause in their contracts that is effective until 2015.

In the spring of 2010, city worker unions voluntarily renegotiating contracts to help balance the current budget. However, the elimination of redevelopment funds creates an immediate deficit in the current year budget, which must be corrected by City Council.

Mayor Jean Quan and other city officials have hopes pinned on a group of state representatives working on a bill to extend the effective date of the elimination of redevelopment agencies. What comes after that extension is unclear.

Layoff notices are being sent via certified mail and delivered in person to all non-sworn city employees affected by the action.

Despite the high number of pink slips, not everyone will be laid off. Seniority rules comes into play at City Hall and some workers can be transferred or see a reduction in hours.

By Jan. 23, Quan and City Administrator Deanna Santana will submit a budget-balancing proposal to City Council and a special meeting will be held by Council on Jan. 25. On Jan. 31 the Council will make a final decision regarding the budget, including which positions will ultimately be cut.

The city's redevelopment agency will be dissolved on Feb. 1 and layoffs will take effect a couple of days later on Feb. 3. Last week, several immediate cost-containment measures were put in place by Santana including a hiring freeze for all city departments. Oakland also has halted "non-essential purchases."

Not since Prop. 13 has Oakland faced such a challenging budget situation where city jobs and services were severely cut. In the last four years, Oakland has slashed about 550 city jobs.

Josie Camacho, executive secretary-treasurer for the Alameda Labor Council, said the city must include its workers in discussions around budget priorities.

"There needs to be some process in place that brings city workers into the discussion around budget priorities and layoffs," said Camacho who's organization includes most of the unions representing city workers. "There are more thoughtful ways to handle this. We know that there is going to be some hurt, but (employees) need to be involved and engaged in the process."