PSJ Commissioners Massage Budget Numbers

Health insurance costs will mean a different company and different plans for employees of the City of Port St. Joe.

During a workshop last week commissioners decided that they would not assume additional financial burden for health insurance for the city or its employees.

After a series of workshops concerning the health insurance offered employees, commissioners provided guidance to city manager Charlie Weston that the city would switch from Blue Cross/Blue Shield to United Health Care for its employee health package.

The reason is simple arithmetic: staying with BCBS would increase costs to the city by over $54,000 in the coming year and increased the price tag to city employees by some $40,000 as a group, according to Dwight Van Lierop, the city’s insurance agent of record.

For example, employees with a health insurance plan covering employee and spouse would mean an additional cost of $3,600 for the employee during the coming year.

An employee and child health package would have cost an additional $1,831 next year for the employee. Even employee-only plans would have gone up between $522 and $636 next year for the employee.

For commissioners, fighting to tamp down costs in a fiscally difficult year, the savings of more than $54,000 for the city along with savings for employees were crucial in overcoming any hesitance with switching from the city’s long-term insurance carrier.

“I think we have no other choice but to go with United,” said Commissioner Greg Johnson.

There is a flip side to the coin, as the United plan will bring slightly higher deductibles and the prescription co-pay for name brand drugs is higher.

In addition, it is unclear if all local physicians will accept patients covered by United as they had BCBS.

Commissioner Charles Stephens also expressed reluctance with moving to another carrier, his expressed concerns being whether or not BCBS would provide a bid on health insurance for the city next year.

“We are shooting blind for next year” due to the federal health care overhaul passed by Congress this year, said Mayor Mel Magidson. “I personally think we need to save the city and employees some money.

The city will hold mandatory open enrollment meetings for employees on Sept. 2-3.

Millage Rate

During last week’s workshop commissioners also looked at options pertaining to certain expenses and how those costs could impact next year’s budget.

In short strokes, commissioners are trying to determine if they will raise the millage rate at all.

Late last month commissioners set a tentative millage rate two mills higher than the current year. That action was to meet deadlines for Truth in Millage (TRIM) notices as well as provide maximum flexibility as commissioners worked through the budget.

Millage rates submitted to the Property Appraiser’s Office by Aug. 4 can be lowered but not raised by the time the millage rate and budget are finalized next month.

Since setting that tentative millage the county has set its tentative millage rate the same as this year’s, essentially locking in a reduction in spending of nearly $2 million as property values and in turn property tax revenue takes another dip this year.

Last week city commissioners were looking hard at an increase of .25 mills – a mill equals $1 for every $1,000 in taxable personal property value – but with Magidson encouraging commissioners to keep the millage rate at its current levels.

“We have to figure out a way to hold the line on the budget,” Magidson said. “We’ve got to hold the budget to no increase in millage.

“There is nothing we can take off the table right now. It’s going to hurt everybody.”

Initially, it will hurt 11 positions in the city workforce where commissioners are proposing cutting nine employees – six from Public Works – and not filling two positions, including an Accounts Receivable clerk.

Commissioners also discussed the potential for employee furloughs – similar to the county, where the vast majority of employees work a four-day week – or even an across-the-board reduction in salaries, with Magidson offering the possibility of cutting salaries 2.5 percent.

Commissioners reduced their salaries from $400 a month to $100 on Tuesday night.

“I would like to see further reduction in staff before we do any cut in salaries across the board,” Johnson said.

Playing a role in the budget process is a recently-completed utility rate study which suggests the city nearly double the cost of water and sewer rates.

Those increases will likely be instituted with the new fiscal year in October and Magidson noted that any increase in the millage rate compounded by increases in water and sewer rates would be particularly painful for the city’s many residents who are seniors, on fixed incomes or otherwise suffering in the tough economic atmosphere.

A quarter-mill increase equals roughly $80,000 – for the city a mill is worth roughly $325,000 – and Magidson urged Weston, his staff and commissioners to consider ways to cut $80,000 from the budget rather than increase the millage rate.

“I will not vote for a .25 mill increase,” Magidson said. “I may be out-voted, but I will not support any millage increase. We need to find $80,000 so we do not have to increase the millage rate.”

One option presented last week was using cash carried forward from the prior fiscal year – roughly $180,000 – to help pay the annual leave, severance and unemployment payments arising from employee layoffs in the current fiscal year and shaving the contingency fund going into the 2010-11 fiscal year to under $20,000.

“I would rather have a lower contingency fund and keep our fingers crossed than raise the millage rate,” Magidson said.