Emphasizing optimism, change and leadership, Mayor Jerry Sanders, City Attorney Jan Goldsmith and four newly elected City Council members were sworn in Monday.

District 1 City Councilwoman Sherri Lightner, District 3 City Councilman Todd Gloria, District 5 City Councilman Carl DeMaio and District 7 City Councilwoman Marti Emerald joined Sanders and Goldsmith at the city’s 67th inauguration ceremony at Golden Hall.

“Are you ready for a government that is open and honorable, where the public’s business is conducted in public?” Emerald asked the crowd. “Are you ready for a council that works as a team to create the change we need? Are you ready for a government we can all be proud of, a government as great as San Diego?”

After taking the oath of office, Sanders, who won a second term in the June primary, and the five freshly elected city officials hinted at tough times ahead – but pledged to remain united and transparent, and rebuff special interests.

“Our city faces tremendous challenges,” Sanders said. “Every city and every state finds itself at the same critical juncture – our revenues have plunged dramatically and it is not clear when, or if, they will return to their former levels … For San Diego, this financial crisis will test our commitment to live within our means.”

The city is facing a $54 million budget deficit in 2010, and four subsequent years of significant shortfalls. Leaders will be tasked with making cuts to city services, while fighting to make good on campaign promises to increase public safety, fund crumbling infrastructure and create more affordable housing and transportation. The council voted last month to keep open libraries and recreation centers, while cutting council district budgets, and community service officers from the San Diego Police Department.

“While it is clear that the city’s financial circumstances will challenge this council to draw on every bit of talent and skill that the eight of us have, I have never been more optimistic about San Diego’s future,” Gloria said.

The new council will be tasked with making more cuts soon.

“In the next few months, we must make decisions that will be difficult – and that I guarantee will make some people unhappy,” Sanders said. “But the vast majority of San Diegans understand that difficult decisions can, and must be made, because they are already making them for themselves and for their children. They know that our world has fundamentally changed. They worry about their jobs, their families and their futures. And they look to us for leadership.

“They want us to be honest about what services the city can continue to provide – and which it cannot. They want us to make sure that everyone pays their fair share – and no one gets a free ride. Most of all, they do not want this budget crisis to become a competition between special interests.”

DeMaio, the first openly gay man elected to the council, strayed from the pack, opting out of a traditional speech and showing instead a video of remarks made by his constituents. Among the comments came calls for fiscal responsibility, improved infrastructure, and civil working relationships among elected officials.

“It’s going to be a lot of hard work, but I think if we work together cooperatively and focus on the people’s business, we can once again create a city government the people can be proud of,” DeMaio said.

Lightner also used her time to empower constituents.

“Do not underestimate your power to change things at the city,” she said.

Goldsmith, received the morning’s first standing ovation – though the message he delivered was rife with criticism.

Goldsmith, who ousted incumbent Michael Aguirre in a bruising runoff election, took aim at the former city attorney after being sworn in. Goldsmith said the city attorney’s office was in “turmoil at the top.”

During Aguirre’s term, the one-term city attorney’s performance was criticized by the mayor, the district attorney and members of the City Council, who said Aguirre refused or neglected to give timely legal advice and turned the city attorney’s office into a political machine.

Goldsmith won election in November, besting Aguirre with 60 percent of the vote.

Goldsmith said Monday there is a strong foundation and a number of committed public servants in the city attorney’s office to rebuild it into “one of the finest municipal law firms in the nation.”

“Moving forward, we can best help our city by maintaining our integrity – providing timely, accurate and nonpolitical legal work – not necessarily the conclusion you want to hear, but the law that we all must obey,” he said. “We can be firm and professional.”

Gloria delivered the optimism in his speech, encouraging residents to get involved in city government and believe in their ability to effect change.

“I stand before you – the son of a hotel maid and a gardener – a Native American, Filipino, Puerto Rican, Dutch gay guy – who with the love of his family and the benefit of an education and the good fortune of being born in this city has just become your council member,” he said. “Ladies and gentlemen, in San Diego all things are possible if we work hard and we believe. Let us commit on this day in this place and at this moment to doing everything in our power to leave San Diego better than we found it. Together I know that we can.”