The city is facing a multimillion-dollar budget deficit for 2002, leading Mayor Irene J. Elia's administration to consider changing to a cafeteria-style health insurance plan that will cut costs while maintaining or even improving employee benefits.
Elia said Saturday a significant portion of the anticipated deficit is attributed to health insurance increases. She said a specific deficit figure has yet to be arrived at, but she is sure it will be more than $2 million.
The increase in health insurance costs will be as much as $1.1 million, according to City Human Resources Director Paul Dziama.
Elia said health insurance costs, especially for retirees and police and fire personnel, "are skyrocketing out of control" and could account for up to half the deficit, including $600,000 in increased payments for retired city employees who receive health insurance at city expense.
Elia said city consultants have identified an insurance program that will help curb city expenses without asking employees to make sacrifices and even provide each of them with a plan better tailored to meet their individual needs.
"We must get our fiscal house in order so we can move this city forward, and that includes addressing the issue of skyrocketing health care costs. We have no control over them. We want to avoid a tax increase. That's absolutely a last resort," Elia said. "I'm hoping if we all work together -- the administration, the City Council and the city unions -- in an innovative way" the city will pull itself out of its financial crisis.
Dziama said the traditional medical insurance plans that most city employees now have cost up to twice the average amount (or more) of a cafeteria benefit program, and often has the city "paying for benefits most employees never use."
He said the cafeteria program not only could save the city up to $1 million, but could also save each employee out-of-pocket medical expenses.
He said towns such as Lewiston and Wheatfield have already taken that approach.
Elia said the city plans on discussing the health benefits approach with its unions.
But medical insurance is not the only area city officials are examining as a way of heading off a big deficit at the pass. She said administration officials also are working with consultants to find other cost-cutting measures, including not filling vacant jobs.
"We're looking at everything." she said.
Elia said she is asking the City Council for a delay from Oct. 1 to Oct. 22 to present her 2002 city budget. She said she needs the time to come up with more ways to eradicate the spending deficit.