PORTAGE | Employee health care costs are continuing to plague the city's budget.
Clerk-treasurer Chris Stidham told the City Council Budget Committee last week that officials must seriously address the issue and, for employees, that may mean paying a greater percentage of their health care costs.
Stidham said the prime reason city employees have not received raises in several years is because any additional funding the city receives has been put into health care costs.
This year the city budgeted $3 million for employee medical benefits. It is projected it will spend $4.7 million, leaving the city with a $1.7 million deficit in the fund. As in the past, said Stidham, it is likely the city will have to divert funding from the economic development income tax, Utility Services Department or Redevelopment Commission to cover those costs.
This year, he said, is a lost cause. It is too early to tell if the change in health care providers earlier this year will provide the relief needed.
Stidham urged the council to make decisions for 2013 now.
"We don't have the revenue to sustain the spending. We have to fix it," he said.
Stidham suggested providing employees with a two health care alternatives. One would remain the "Cadillac" system the city has now. But, he said, employees would have to pay more for it.
Presently streets and sanitation workers pay no health insurance premiums. A new contract also would give that benefit to firefighters. Most other employees pay $50 per month for a single plan and $100 per month for a family plan.
An alternative would be offered with higher deductibles and lower premiums.
Stidham said presently city employees contribute 2 percent toward their health care. The average for municipalities across the state is 15 to 20 percent; the average for private business is 30 percent.
If a two-tier system were initiated, Stidham believes the city could offer raises. If employees were given a 3 percent pay increase, those choosing a higher deductible plan would realize additional funds in their pocket. Those choosing to remain with the low deductible likely would see less take-home pay.
He also believes in the short term the city would save more than $650,000 in the first year in health care costs.
"I want to put more of the choice on the employee," said Stidham, adding a wellness program and wellness incentive also would be offered to employees.
Stidham said officials need to act soon. Of the 195 employees covered under the city's plan, 125 of them are union members. Changes in health care plans would have to be part of labor negotiations and would have to be completed by the end of the year to realize savings in 2013.
"I know this is not going to be popular with the raise in premiums," said Stidham, adding so far the city has not laid off employees, but he sees that as a more likely scenario if health care costs are not reined in.