Mayor Michael W. Tucker told the Common Council on Wednesday that layoffs might be necessary in next year's budget if the Council wants to obey the state's 2 percent property tax cap.
The Council voted to override the cap for the 2012 budget it passed in November, and it increased the tax levy by 9 percent.
Tucker told the Council that all five city union contracts run out at the end of this year.
"If we don't get some wage concessions, which we probably won't, and some health care concessions, those things alone will put us over 2 percent," the mayor said. "If you're going to hold [a tax increase] at 2 percent, you're going to have to reduce the force by layoffs. I'm not going to be hiring anybody for a while."
He told the aldermen he intends to meet with them individually in the next few weeks to sound out their attitudes toward meeting the tax cap in the 2013 budget.
"Sometimes it's hard to keep expenses low. Health care will go up. It always does, probably 15 percent," Tucker said.
And a state-mandated increase in the city's contribution to the state public employee pension fund also is coming, Tucker said. That amount isn't known yet.
The police and fire unions have binding arbitration rights if they can't agree with the city on a new contract. City officials have complained in the past that the arbitration process is stacked in the unions' favor.
"Are we going to get a wage freeze? Probably not," Tucker said. "We've got to get something in negotiations to offset the cost of health care. Gotta get it."
Tucker's comments followed a year-end report on 2011 financial data from City Auditor Ruth E. Ohol.
The city spent about $351,000 more than it received in revenue for its general fund, Ohol reported. "At the end of the year, you're proably going to see a reduction in fund balance," she said.
Tucker said some 2011 revenues may come in late, but he admitted the city's roughly $1 million unappropriated fund balance, or surplus, is likely to decrease.
So far, 2011 sales tax collections have reached only 90 percent of the budgeted amounts, missing the $2.5 million target by $242,000. But the city collected 96 percent of the property taxes it levied and exceeded the ambulance fee target by 6 percent, or $36,000.
On the spending side, overtime was the culprit as usual. The Council budgeted $225,000 for Fire Department overtime, but the department spent $407,122.
Police overtime totaled $328,077, exceeding the budgeted figure by almost $64,000. Overtime by streets workers was $177,000; the city budgeted only $65,600.