The city ran an operating deficit last year, but thanks to savings on health insurance, it wasn't as bad as expected, the Common Council learned Wednesday.
"It could have been worse," said City Clerk and Budget Director Richard P. Mullaney.
The city's general fund, which is where property taxes go, spent $904,000 more than it took in.
However, the 2010 budget estimated that the deficit would have been $1.1 million, which the Council filled by appropriating that amount from the fund balance, also known as the surplus.
As of the beginning of this year, the city had $1.1 million left in the fund balance, which is $200,000 more than expected.
The unaudited figures for 2010 show that the city spent only 85 percent of what it budgeted on employee benefits. That $1.12 million savings prevented the city from wiping out its surplus completely.
"That was the key to the whole budget," Mullaney said.
It was accomplished by doing away with the most expensive of the health insurance options available to employees, a move the city's five unions agreed to in contract talks in 2009.
The shift into four less expensive options for current workers and retirees under age 65, along with moving older retirees into a Medicare Advantage plan, produced the savings.
It kept the city solvent even though most of the major departments spent more than they were allocated in the 2010 budget. The only exception was the Fire Department, which came in $20,000 under its $3.76 million budget.
Mullaney said the reason most departments went over budget was early-retirement incentives authorized by the state last fall, something that was unanticipated when the 2010 budget was adopted.
Two dozen employees retired, forcing the city to pay off their unused sick and vacation days. Firefighters and police officers were not eligible for the retirement incentive, which included extra pension contributions the city will have to pay starting in 2012.
First, the city must grapple with a 24 percent increase in Blue Cross/Blue Shield premiums for its health plans this year. Mullaney said the 2011 budget assumed the increase would be only 12 percent.
Mullaney said Mayor Michael W. Taylor expects to sit down with the unions soon and ask for some health concessions to help fill the shortfall.
In another matter Wednesday, the Council discussed an unfair labor practice charge filed against it by the Hickory Club Police Benevolent Association.
Deputy Corporation Counsel David E. Blackley said the police union wants the city to bargain over the impact on police officers of shifting the task of dispatching fire calls to the police desk.
That move was made last year without a connected increase in police pay. "Impact, when you look in the labor law dictionary, equals money," Mullaney said.
Blackley said he's confident the union's beef can be settled in-house without having to turn the matter over to the state Public Employment Relations Board for a hearing by an administrative law judge.
"There's no question we'll be able to settle it," Blackley predicted.