At the Homer City Council on Monday, the council put on its agenda the most important item of the year: setting the fiscal year 2013 budget.
Homer City Manager Walt Wrede submitted the budget this week and the first public hearing was held. The council will make adjustments over the next three months, including proposed deletions and additions. By law, the council has to pass a balanced budget by Dec. 21.
The draft budget of $25.3 million dollars includes $11 million in general funds, primarily for personnel, operations and maintenance.
“This can basically be described as a ‘status quo’ or ‘treading water’ budget,” Wrede wrote in a memo with the budget.
The budget is close to balanced, with $25.1 million in projected revenues. The challenge to the council is to make the numbers match, either through budget cuts or better revenue projections later.
Wrede didn’t include these items:
• Cost of living allowance, or COLAs, wage increases to city employees, the fourth year without a COLA;
• No new hires, including filling vacant positions, such as a police dispatcher;
• Depreciation except for revolving energy fund, seawall maintenance and fleet reserves;
• Moving the Community recreation program into the Homer Education and Recreational Complex building;
• Nonprofits except as funded in 2012. The Homer Chamber of Commerce and Visitor Center and the Pratt Museum have asked for a budget increase. Homer Senior Citizens Inc. also has asked for $50,000 budget allocation, Wrede said.
At the Committee of the Whole meeting, Wrede and finance director Regina Mauras gave the council an overview of the budget. One of the biggest expenses is $11.3 million in personnel costs.
As private companies and other public agencies know, increasing health care costs have made meeting a payroll more expensive. The city employee committee has been meeting to address these costs, and the city’s insurance broker is looking at the city health plan for ways to reduce health insurance costs. The 2013 budget adds $200,000 to the city Health Insurance Fund.
The city insurance broker has suggested ideas that could cut insurance costs, such as increasing deductibles, increasing the out-of-pocket maximum, adding an office visit copay and increasing the drug copay, about $150,000 in savings.
Council member Francie Roberts noted that the $150,000 savings is about the same as a 1-percent COLA of $120,000. If the city saved $150,000, maybe the savings could be passed on to employees as a wage increase.
“That’s a trade off employees would find appealing, COLA versus changes in the health care plan,” Wrede said. “Neither of those is good news.”
Wrede said balancing the personnel budget is tough for him. “On the one hand you want to reward employees what they’re worth,” he said. “As a manager trying to run a business, these costs are just crippling us.”
The 253-page draft 2013 budget is available online through the city’s website at www.cityofhomer-ak.gov or at City Hall.