Council meets on status of budget deficit “fixes"

February 25, 2010
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Late fall, City Manager Jay Ash reported that the combination of local aid reductions, a slow down in revenues associated with economic development and higher health insurance costs, among other items, could thrust the City’s budget into a $6.5 million deficit. Since then, numerous actions have been taken, including the elimination of more than 40 positions, Representative Eugene O’Flaherty’s $600,000 a year State payment to the City and the imposition of a 0.75 cent local option on the meals tax to bring the project deficit down to around $1 million dollars.

On Monday night at Chelsea City Hall in a packed committee room, a City Council subcommittee met to discuss potential budget deficit fixes with City Manager Jay Ash.

“I guess the good news is that things haven’t gotten worse,” Ash half-jokingly reported on the status of the City’s budget and all that is impacting it.

“Much has been done, but we’re not there yet,” Ash said of bringing the budget into balance.

Among the items Ash planned on implementing to close the deficit is a 100% increase in the cost of health insurance to retirees and the withholding of a 53rd week of pay which he says may or may not be required by the City Charter.

“Neither is desirable, but both may be necessary in order to eliminate the deficit,” Ash told Councillors last fall.

In December, and after protests from retirees and complaints from unions, the City Council asked Ash to stall the implementation of those budget-closing initiatives in order to take more time with municipal unions to discuss alternatives. Ash agreed to the non-binding Council vote on the subject and has been talking with several of the City’s 8 municipal unions about matters ranging from wage reductions to furlough days.

“We’re required to collectively bargaining these matters, and the unions I am speaking with appear to be acting in good faith to engage in that process. I’m pleased that unions recognize that the City’s budget has some problems, and I remind Council that it wasn’t employees who created the mess we are in. The fact of the matter is that non-school local aid is back to 1985 levels and health insurance continues to increase by double digit percentages,” Ash reported to the subcommittee.

Councillors peppered Ash with questions, with his answers seemingly winning the approval of Councillors who were shaking their heads in agreement.

“Almost every city and town is experience financial difficulties in these terrible times, and it appears that he (Ash) has a great grasp on what our issues are” said City Council President Leo Robinson. “What’s important now is that everyone, including our unions, roll-up their sleeves and work cooperatively together to get our budget balanced, both this year and next, before even deeper layoffs and other less desirable outcomes happen.”

Ash said that he will continue to meet with unions and hopes to find as much as $700,000 in savings to apply to the deficit. He told Councillors that joining the State’s heath insurance program doesn’t appear to be an option that can be counted on for savings, which might be as much as $2 million a year.

“I’m off of that for now,” said Ash referring to his desire to get the City into the State’s health insurance system. “We could save a bundle in doing so, but I understand that unions and their memberships continue to have deep concerns and they are not budging. I’m interested in trying to take a new approach of achieving health insurance savings, though, because we can’t keep taking the hits we are on our health insurance budget.”

Ash told Councillors that the City’s health insurance premiums will rise by about 10% a year. Several Councillors expressed hopes that unions would agree to some health insurance changes.

“I think we all respect the collective bargaining process, but something needs to happen on health insurance,” said Robinson. “We’re laying off people and reducing services to taxpayers, in part because health insurance costs have doubled over the last decade. None of those are good things, so everyone needs to come together to find a solution.”

Ash pledged to continue to work towards the solution and said that he believed unions were willing to do the same. None of the dozen union officials who attended spoke after being given the opportunity to do so.

“Make no mistake, there are no agreements now, and I do not speak for them (the unions). But, I have had productive discussions with several unions and hope to close out some agreements in the coming weeks,” predicted Ash.

Robinson noted that the Council would likely reconvene the subcommittee meeting in March to see what progress is being made.

“Without progress, we’ll have to hear what action the City Manager is going to take to eliminate the budget deficit. Those actions certainly won’t be pleasant, I imagine, so I hope everyone gets on the same page real soon,” concluded Robinson.


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