City of Homer budget projections ‘treading water’

Staff report
Homer Tribune
The Homer City Council got its first look at the 2014 fiscal year budget last Monday night, a spending proposal called status quo or “treading water”  by City Manager Walt Wrede.
Since all sales tax figures won’t be known until November, City Finance Director Zhiyong Li and Wrede based the budget on projections. Based on anecdotal information from the Homer Chamber and the Marine Trades Association, the staff projects an increase of $400,000 over last year in sales tax.
A Cost of Living allowance of 2 percent could be headed for city employee paychecks. Wrede justifies this by noting there’s been no COLA for the past five years. At the same time, staff is shouldering more of its health care costs.
But the budget doesn’t contain any new hires. That’s bad news for city departments that have urged the administration to help solve understaffing problems. Wrede expressed concern.

“From a management perspective, I can tell that we have some very urgent needs in some departments, especially police dispatch, building maintenance, parks and the library,” he said.
Fire Chief Bob Painter also cast an appeal in a dire need for more hired help during busy times of the season to assist the mostly volunteer organization.
Nonprofits will be funded at last year’s levels. The Homer Chamber has requested an increase in allocation, but that request isn’t fulfilled in the proposed budget.
If revenue is greater than the projection, Wrede cast an appeal for the Council to use the money for hiring. “Staffing requests from the Fire Department are well supported and would improve public safety and public services. Parks could really use another seasonal employee,” he wrote. But the critical priority is filling a vacant police dispatch position, upgradeing the children’s library position and get help for building maintenance.
He also wants money allotted to the depreciation accounts and cast an especially strong appeal for the 2 percent COLA for the city’s hiring competitiveness and for the morale of city employees.
A big problem was encountered in the skyrocketing of costs for the city’s health insurance. “Health care costs are rising so rapidly that it affects every decision we make about the budget. Health insurance is now driving the bus,” Wrede warned the Council in a separate budget memo.
In 2012, the city budgeted $1,300 per month for each employee for insurance. But actual expenses for that year were $1,912.82 per month per employee. This led to a cost overrun of $641,115. Average costs were slightly lower by May 2013 at $1,871.20 per employee per month.
“To make matters worse,” Wrede wrote, “the broker projected that if no changes were made to the plan, the cost in 2014 would be $2,050.81 per employee, per month,” or $2.4 million a year.
On Sept. 23 and 30, staff met with the employees to explain changes ahead. Employees will be making up the additional costs through plan amendments and premiums. There will be higher co-pays, higher deductibles and higher out of pocket limits, Wrede warns.
“We have not cut the city budget for health insurance. We have simply stopped the escalation in costs,” he said.
Nevertheless, there’s no way to sugar coat what’s ahead. If implemented, this will hit employee wallets and reduce their benefits.

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Posted by on Oct 22nd, 2013 and filed under Business. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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