The Sunday closings of 16 library branches in Toronto will be reversed in the latest setback for Mayor David Miller and his plan to trim services to save money.

Other cost-cutting plans — to close community centres one day per week and delay the opening of artificial ice rinks — have also been scrapped, the first because of public complaints and the second after a major credit card company offered the city the $160,000 needed to open the rinks on time.

The latest about-face came after an arbitrator's report agreed with a union grievance that the Sunday closings amounted to an illegal layoff.

The library doors were closed on Sundays beginning on Sept. 9 as part of city-wide budget cuts.

On Monday night, after considering the arbitrator's report, the library board voted unanimously to reopen the branches.

The decision to close the 16 branches on Sundays was supposed to save the library $400,000, one-third of a $1.2 million reduction of its 2007 budget.

But it is unclear whether the city will realize any savings since the union is demanding that employees be repaid any money they lost.

Councillor Denzil Minnan-Wong called the situation "a comedy of errors." 

But a fellow councillor said the decision to close branches was made with the best available advice. 

The library board was advised that the hours worked by employees on Sundays were voluntary overtime. The union disagreed and the arbitrator ruled in their favour.

"The recommendation was that we can do that [close on Sundays]. But basically what the [arbitrator's] decision does now is basically say, you can't do that, so you have to pay folks, so we will reopen and pay folks for their work," said Councillor Anthony Peruzza.

The libraries are expected to reopen on Sundays on Oct. 28.

Next Monday, city council is set to reconsider Miller's scheme to introduce a new land transfer tax and a new vehicle registration fee.

The two new taxes, according to Miller, will raise about $350 million.