Council debates wages versus health care costs |

Council debates wages versus health care costs

The Craig City Council added $169,355 in expenses to the $7,796,655 2006 budget at a work session two weeks ago. On Tuesday night, they worked to balance those additions with a unanimous desire to increase employee pay.

Facing mandatory cuts if they want to balance the budget, council members looked at other options — including decreasing the amount the city pays for employee health insurance.

The addition of 2 1/2 employees and the vehicles those employees will need left an $85,918 surplus. A 1 percent pay increase costs the city $36,000. A 3 percent cost-of-living wage increase for all employees recommended by Mayor Don Jones puts the city $22,082 behind.

“I’d like 5 percent, but health insurance costs have gone up so much,” he said.

The city’s health insurance is partially self-funded. The city pays claims as much as $30,000, then an insurance plan kicks in to cover the remainder. The cost to the city has increased 31 percent.

The city pays 93 percent of the total cost of each employee’s health plan.

But, the city could save by revamping the plan, Finance Director Bruce Nelson said.

Doubling employee deductibles — currently $200 a person or $400 a family — could save the city nearly $100,000. Changing coverage rates from 90 percent paid by insurance and 10 percent paid by the employee to an 80 percent, 20 percent ratio could save as much as $120,000.

That change would increase the maximum any employee pays out of pocket each year from $600 to $1,200. For a family, that would increase from $1,200 a year to $2,400 a year. Ninety percent of the city’s employees have family coverage.

“It will have an impact (on their checkbooks),” Councilor Joe Herod said. “If we give them a 3 percent raise and leave health insurance alone, maybe they’ll understand.”

Department leaders have said their employees would prefer a smaller raise to changes to their health benefits.

Nelson was asked to evaluate the financial impact a 3 percent or 4 percent raise would have for the average employee and compare that to the cost of increased health insurance costs.

“I’d rather not take it out of their pockets,” Herod said.

Councilor Tom Gilchrist suggested that the city bank on increasing sales tax revenue, give a 3 percent raise and cut a capital project in the last quarter of 2006 if sales tax doesn’t keep pace with expenditures.

“It’s not employees’ fault we put $160,000 worth of additions in the budget,” he said.

The council will continue the discussion at its Nov. 8 meeting.

Their struggle didn’t mean good things for Yampa Valley Partners, which requested the council increase the organization’s annual allocation from $7,500 to $10,000. Although discussion glossed over whether to grant the increase, City Manager Jim Ferree said it won’t be included in the numbers he presents to the council at the next meeting unless specifically instructed by the council.

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