Staff writer
ttjohnso@observer-reporter.com
Property owners in the city of Washington will have to squeeze their personal finances even tighter if the tentative 2009 budget city council presented Monday is adopted Dec. 18.
The preliminary budget includes a 12.5-mill tax increase on land only, which is in addition to the 30-mill increase on land taxes council approved after reopening the 2008 budget in February.
After attempting to cut expenses and increase revenues, council members turned to a tax increase to balance the budget.
"Do we like any of it? No," said Mayor Sonny Spossey after the first reading of the proposed budget. "I have to pay it, too," Spossey said with a slight shake of his head.
Spossey attributed the increase in taxes to rising health-care costs and contract and pension obligations.
Council also voted to increase the earned income tax to 1.15 percent, effective Jan. 1. This, Spossey said, will generate $180,000 to $190,000. However, the money is only permitted to be used to fund the pensions. With investment income dropping, the city must continue to fund employee pensions with a substantial balloon payment due in 2010. After the city floated a $10 million bond issue a few years ago, Councilwoman Virginia Ullom, director of the city's department of accounts and finance, said the investment rose to $24 million. However, recent losses reduced the investment to $16 million.
The city has attempted to reduce costs over the past few years. The treasurer's office has three employees, down from a high of seven. The street department operates with eight employees, down from 12 a few years ago.
Facing a huge increase in health-care premiums through the current medical carrier, Highmark, council voted Monday to switch providers to HealthAmerica to save about $52,000 in premium increases.
Not everyone is happy, even with the savings.
Councilman Tom Blackhurst was the only council member to vote against the switch. His reason, he said later, was that the new carrier requires employees to submit bills to a third party, which reimburses the employee, who then pays the medical provider.
Before the vote, Blackhurst said, "Often, you get what you pay for." He said the new policy "places an extra burden on the employee."
The city provides free health care, minus co-pays, to all eligible employees and council members.
Council also voted to switch its life insurance carrier to Hartford Insurance to save the city between $8,000 and $11,000 annually for comparable coverage.
No vote is required for the first reading of the budget. However, Councilman Matt Staniszewski indicated he does not approve of the tax increase.
"This budget is in a shambles now," he said.
Ullom immediately responded, "You should know," referring to the 2007 budget shortfall - when Staniszewski was director of accounts and finance - that required council to receive court approval for a $2 million, 10-year bond issue to pay bills to the end of the year.
When Ullom and Staniszewski began to hurl accusations, Spossey pounded the gavel and shouted, "Enough."
Staniszewski wants to cut expenditures but says dealing with other council members is "like talking to a brick wall."
Spossey replied that Staniszewski does nothing but talk and fails to offer suggestions.
When Staniszewski accused Spossey of not valuing his opinions, Spossey replied, "I do (value your opinions), and that's the sad thing. It's your demeanor. Your interest is Matt Staniszewski. Your interest is in politicking for next year."
Staniszewski is up for re-election in the spring.
"What are you talking about?" Staniszewski said sarcastically as he stood in the mayor's office following the meeting. "You've been a lifetime politician."
"You're all politics," Spossey shouted.
With that, Staniszewski left the room.
Council will be holding several budget meetings in an attempt to reduce the increase before the final form is adopted at noon Dec. 18.