NEW ALBANY —
The mood surrounding a pending public safety budget shortfall of $1.8 million softened for at least one member of the New Albany City Council Wednesday.
If the projected financial numbers for the next two years are solid, Councilman Bob Caesar said laying off firefighters or forcing furloughs on employees wouldn’t need to be considered.
“Our police and fire and our communications [departments] do a great job for the city of New Albany,” Caesar said. “But you’ve got to live within your means.”
Caesar said that can be accomplished if city leaders keep close tabs on spending and if a majority of workers switch their insurance coverage to a Health Savings Account, or HSA, plan.
Numbers provided by Mayor Doug England’s administration point to a slight surplus in the general fund for New Albany by 2012 — a move to the black that primarily hinges on the insurance proposal.
The council unanimously defeated a measure that would have shifted $1.8 million in unfunded 2010 public safety expenses to the city’s Economic Development Income Tax account last week.
Some members requested other funding options including using money from rainy day and riverboat funds as well as possibly splitting the appropriation into two separate votes.
While no consensus was reached during Wednesday’s work session, the council could take a vote as early as Sept. 2 on a funding proposal.
City Attorney Shane Gibson and City Controller Kay Garry presented summaries of the financial balances in the three reserve accounts being considered — EDIT, rainy day and riverboat — which equate to about $4.4 million in unencumbered funds for the rest of the year.
The administration is asking the council to balance the projected shortfall this year and a projected $750,000 gap in 2011. If between 75 and 85 percent of city employees accept the HSA insurance plan, the deficit will be turned into a surplus in 2012 according to the administration’s plan.
“From where we’ve been in the past to where we’re hoping to be in the future, it’s night and day,” Gibson said.
Councilman Jack Messer said officials still need to be stringent about overtime expenses to make sure anticipated numbers don’t stray into another shortfall.
Caesar added the end goal must be to keep the situation from repeating in the future.
“The key number is this — at the end of 2012 there’s a surplus,” he said.
There are some variables that could impact that objective, Gibson conceded. A rise in insurance costs or less participation in the HSA plan by employees could affect the numbers, he said.
Humana has provided the city with two open enrollments leading up to a Jan. 1 start date, so the exact percentage of workers buying into the HSA option won’t be known for some time.
Gibson said that included in the budget projections is a stipend to be paid by the city to employees that take the HSA option. A single-buyer would get $500 deposited into their HSA account, and a worker on the family plan would get $1,000 only in 2011 under the administration proposal.
Gibson said this would be a way to entice employees to take the plan, which will in turn save the city money.
Some costs such as prescription medications will rise for HSA customers, but after they meet their annual deductible they are fully insured and aren’t required to contribute any other money for the remainder of the year.
Any money in a HSA account not spent is carried over to the next year, and the funding is not taxed.
Gibson said most employees that have been educated about the HSA plan seem supportive of the idea.
As for the $1.8 million shortfall, Gibson said the administration is open to using any of the city’s reserve accounts as long as reductions in public safety service can be spared.
“We have no preference on how it is funded,” he said.
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