Mayor Dennis J. Kucinich said today he would lay off 2,000 city employes, including 875 police. The announcement came only hours after his brother was arrested for the unarmed robbery of one of the banks that refused to berefinance millions of dollars in loans, an action that led the city to default Friday.

Perry Kucinich, 22, was allegedly carrying a suitcase with $1396 in it when he was stopped by police and charged with the unarmed robbery of a branch of the Central National Bank.

The arrest came almost at the moment the mayor was withdrawing $8,249.04 from a perssnal savings account and $948 from a checking account from the Cleveland Trust Co., the first bank to state publicly it would not refinance the loan (of $5 million) owed by the city.

Mayor Ducinich indicated his action was a gesture of protest against Cleveland Trust, aaying the bank is "trying to destroy a city government through blackmail and indtimidation. I am going to take my clean money out of this dirty bank."

With Cleveland now facing bankruptcy early next year, Kucinich made the following cutbacks: police, 875, almost half the force; firefighters, 450, almost half the force; refuse collectors, 250; recreation employes, 225, and micellaneous 200. He said the layoffs would save $3 million a month.

Kucinich met with the heads of the 17 unions, outlined the layoffs and warned the unions not to strike or take any legal action against the layoffs or he would retaliate by voiding their contracts.

Paul M. Wells, president of Local 1099 of the Municipal Foreman's and Laborer's Union, said, "A strike is very, very real.I will See CLEVELAND, A10, Col.3 CLEVELAND, From A1 picket the airports, and you can't bury anybody in this city if he (Kucinich) lays off one of my members." Wells represents 900 laborers, including gravediggers.

"The criminals are about to take over," said William J. McNea, president of the Cleveland Police Patrolmen's Association. "Crime will rule this city."

Jack Gannon, president of the Cleveland Association of firefighters, said "It's all for one and one for all. If they're going to cut us to 500, it might as well be zero."

William J. Gallagher, president of the Fraternal Order of Police, predicated a wave of violence such as that in Detroit several years ago when that city laid off several hundred police.

Gannon was bitter over what he called Kucinich's heavy-handed tactics, saying that the mayor told the unions: "Do what I say or i'll destroy you."

City Council president George L. Forbes pleaded with the unions not to strike.

Kucinich said he originally estimated that about 3,500 people would be layed off, but that he "pared" the total down in meetings with his cabinet.

He indicated that the downtown, where the banks are headquartered, would not receive the level of services to which it was accustomed, saying, "No area will get preferential treatment."

The mayor said he regretted the "decline of the quality of life in this city" and added that he hoped the layoffs would only be for six months.

He noted that they ;"will significantly affect the city's ability to provide safe passsage for schoolchildren" during courtordered school desdgregation scheduled for February.

He reiterated his plea that the banks hold of collection on the notes and again asked the City Council to put a 50 percent tax increase on the ballot Feb. 20 and to sell land to raise cash and froestall some layoffs.

The mayor refused to go along with a council plan to put the sale of the Municipal Light plant on the ballot and let the people decide if they wanted to keep the plant, which is $50 million in debt.

"I'm not going to give CEI (Cleveland Electric Illuminating Co., which has said it would purchase the city plant) an opportunity to steal an election. We cannot permit white-collar criminals to take away a people's electric system," Kucinich said.

The mayor has saked the Justice Department to investigate ties between CEI and Cleveland Trust, which have interlocking directorships.

Kucinich discussed his brother's arrest but refused to answer questions about it. He said it would be irresponsible for his political enemies to try to capitalize on it. His brother, Kucinich said, has "serious mental problems and has been under psychiatric care. I'm sure he didn't understand what he was doing."

In addition to the $1,396, Perry Kucinich was carrying a Christmas card with "all your $ or die" written on the back of it, police said. Among the money was $500 in marked $20s, the FBI said.

This is not the first time his brother's conduct has embarrassed the mayor at a critical period. Last year during the mayoral campaign, Perry Kucinich jumped through a glass window at a hospital. Police said he was admitted while suffering from an LSD overdose.

In another incident, the younger Kucinich was restrained by City Hall police after he knocked over a painting. "The Spirit of 1776," in City Hall.

The mayor's uncle also has left him red-faced on at least one occasion. George J. Kucinich, who spent three years in prison for possession of burglary tools, was arrested for shoplifting aspirin from a suburban market. The incident occurred shortly after his nephew's election as mayor. George Kucinich pleaded no contest to a reduced charge of disorderly conduct and paid $50 fine. He now works in the city's department of consumer affairs. It was not clear whether he will be affected by the layoffs, expected Jan. 2.

Early yesterday city officials were scrambling to raise cash to cushion the effects of the layoffs.

Forbes said businessmen had agreed to make advances on their property taxes, a move that helped Cleveland public schools avoid running out of money last summer.

Based on cash-flow reports given to banks last week, the city could be bankrupt in February. There is $20 million in construction bills due at a time when the treasury will be empty. Should the city fail to pay these bills, creditors can be expected to file lawsuits that could lead to court action placing the city in receivership.

Meanwhile , Standard & Poor's Corp. today downgraded from "A" to "A-minus"

[WORD ILLEGIBLE] rating of Cleveland water revenue bonds since it seems unlikely the city will be able to repay $17 million in city notes held by the water system construction fund.