Officials change approach to budget

A few council members threw around the 'L' word -- layoffs -- as a possibility.
YOUNGSTOWN -- Dropping revenue and a 25-percent health-insurance increase are among reasons why city officials will prepare the 2002 budget differently.
"Everybody needs to be aware it's going to be a tight year," Finance Director Barbara Burtner told city council's finance committee Wednesday. "2002 is going to be tighter than 2001."
Her department is closing the books on last year's finances and doesn't yet know where the city stands.
Evidence suggests the situation isn't good.
How it was: The trend all last year showed tax revenue failing to meet even conservative projections. In 2002, raises for most unionized city workers and a 25-percent health-insurance increase -- an additional $1.3 million in costs -- adds to the predicted budget woe.
"We haven't had a crunch year like this in the last four years," Burtner said.
Usually department heads make their case for how much money they want.
Instead, this year Burtner will figure out how much 4-percent and 30-cent-per-hour raises for most workers will cost. Then she'll add in the higher insurance costs, which jump from $5.1 million to $6.4 million.
Once all the costs are known, departments will be given the list and a chunk of money. Departments will propose how to spend the money left over after wages and benefits are covered.
"They'll all have to share in the increased costs," said Mayor George M. McKelvey.
Chairman's request: James E. Fortune Sr., D-6th, finance chairman, asked that council be briefed on the city's financial status before departments submit their proposals. Burtner said she would.
That's not how it's usually done, but the 2002 budget is different than spending plans of the past, she said.
Burtner hopes to have the budget done by the end of February. Usually a full-year budget isn't approved until the end of March. The city is operating on a three-month budget, which is one quarter of the 2001 budget.
Why the increase? Much talk centered on why health insurance increased so much.
Just one company, Medical Mutual, bid on the contract. The city's bad claim record and prescription costs, rising by $100,000 to $500,000 in 2002, are among other factors.
"Our experience kept bidders away," said Law Director Robert Bush Jr.
Wednesday's talk had a couple of council members throwing around the "L" word -- layoffs.
Artis Gillam Sr., D-1st, suggested talking to the unions so they understand the city's financial position. The two sides might reach a compromise that way, he said.
Richard Atkinson, R-3rd, asked about increasing the amount workers pay toward health insurance.
Most workers pay something, McKelvey said, but he doesn't see the amount changing.
Could ask unions: The city is in the first year of three-year contracts. The city can ask unions about contributing more, but must offer something comparable in return, he said. He doesn't foresee any givebacks.
The city signs only one-year health insurance contracts to capture savings if a lower rate is found, which has happened the past three years, McKelvey said.
The last contract, however, there was a spike. Increasing health-care costs nationwide, rather than the city's actions, caused that, he said.
"There are intangibles we can't control," McKelvey said.
Workers should know, then, that layoffs are a possibility, Atkinson and Fortune said.
"That's going to be the bottom line," Atkinson said.

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