A smaller-than-expected increase in the City of Tacoma’s costs for providing employees with medical coverage could free up to $11.3 million over the next two years.
Nearly a third of that money would be used to restore funding to city services targeted for budget cuts or pay for other unfunded programs, City Manager T.C. Broadnax told the City Council Tuesday.
The savings also would allow the city to set aside about $2 million to help pay for unfunded police officers and firefighters down the road, when nearly $13 million in federal grants that now cover more than 40 public safety jobs expire, Broadnax said.
“Those are revenues that we do not have today — except for by those grants — to provide and preserve our services,” Broadnax said. “So, we want to begin to help put those dollars away … to get to at least keeping our staffing levels where they are today.”
Most of the savings come from an expected 5.1 percent reduction to the city’s cost of providing employee health care coverage in 2013, Broadnax said. Tacoma had been projecting a 12 percent increase in the costs of providing health care coverage, but has been able to negotiate a 6.9 percent increase with health care insurers.
The city also anticipates — as part of a separate, tentative deal with Tacoma Joint Labor — phasing out a $30 per month contribution that employees can use to help pay health care premiums or fund flexible spending accounts. The proposal involves paying each employee a lump sum of $360 in 2013, but ending the contribution by 2014. That would save about $1.3 million, Broadnax said.
But that’s not a done deal just yet.
Alice Phillips, the joint labor committee’s chairwoman, said Tuesday that represented city workers are now voting on the proposal, with ballots set to be counted Nov. 29. As part of the proposed deal, the city has not promised union members anything, she added.
“There’s been no guarantee of no job cuts,” Phillips said. “We’re considering this because we’re partners in this budget crisis.”
In all, about $3.5 million of the potential health care savings would impact the city’s cash-strapped general fund that covers the city’s basic services, such as police, fire, libraries and public works.
About $1.5 million of the potential general fund savings would be spent on a variety of services facing cuts and other now unfunded programs, ranging from a $30,000 allocation for the Tacoma Sports Commission, to $600,000 for “Prepare Children and Youth for Success” programs.
The remaining savings — about $7.8 million — comes from health care cost reductions to employees who are paid with city funds outside of the general fund. Broadnax recommended that money be set aside into reserves.
“It’s really important that most of this goes into reserves,” Mayor Marilyn Strickland said, “because, as you know, our reserves are not as plentiful as they should be.”
Also Tuesday, Broadnax noted the city would begin imposing a planned $20 fee on vehicle license tabs on June 1, 2013 — one month earlier than called for in his budget plan.
The timing change, which comes at the council’s request, would allow the city to collect an additional $200,000 in revenue for street projects, he said. In all, the new fee is expected to raise $4 million over the next two years.
The change is among several final tweaks to Broadnax’s proposed $397 million general fund budget for 2013-14, in preparation of the council’s final vote on Dec. 4.
Broadnax’s plan aims to close a $63 million gap projected for the next two years through across-the-board cuts to city departments — including the elimination of more than 200 positions — and by raising about $9.5 million in new revenues from the new vehicle tab fees and the cancellation of a business tax exemption for nonprofit hospitals.