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October 3, 2013

Lower health costs to aid budget

SHARON — Next year’s budget isn’t balanced yet, but Sharon City Manager Scott Andrejchak says a sizable cut in health insurance costs will make that fiscal chore much easier than it might have been.

He’s hopeful the new budget he’ll give to city council at the end of the month won’t include a tax increase.

Highmark, the city’s health insurance provider, has told Andrejchak the premium for the Community Blue health care plan that covers city employees and retirees will go down by 25 percent.

Insurance that cost about $1 million this year will cost about $750,000 for 2014, a reduction of about $250,000.

Making the change to Highmark last year wasn’t popular with some city workers because their UPMC-affiliated doctors would be considered “out of network” for Highmark subscribers.

Andrejchak said that except for a few “bumps in the road,” employees have been generally satisfied with the insurance change that the Fraternal Order of Police initially rejected but eventually accepted last year.

“The city had to fight to get everybody into Community Blue because there was resistance, and it took some time to resolve it amicably,” Andrejchak said. “We can see by the savings now that it was a good thing that council stuck to their guns, or we’d be in pretty serious trouble now.”

Next year, firefighters, workers represented by AFSCME and non-union employees will pay 12.5 percent of their health care premiums. By 2015, they will pay 15 percent of the premiums.

Contract negotiations are under way with police, whose labor contract expires Dec. 31.

Covering health insurance costs for less money removes some – but not all – of the pressure in figuring out a new budget to replace this year’s $7.76 million spending plan.

Andrejchak said the savings in health insurance nearly replaces the $280,000 – and final – payment the city got this year from Sharon Sanitary Authority for the sale of the sewage treatment system.

About $105,000 of that helped to balance this year’s budget, and the $175,000 balance was earmarked for such capital needs as police cruisers, street department snow plows and other equipment.

Other operating costs will be higher next year – including contracted wage increases, pension payments, worker’s compensation and liability insurance – so there’s more number crunching to do before Andrejchak gives his budget proposal to council.

“I’m still gathering information so there’s no guarantee but I am cautiously optimistic we will be able to prepare a balanced budget without significant service reductions or a revenue increase,” he said.

The budget last year was funded by 29.51 mills of real estate tax, five of which went to service debts. A mill is $1 for every $1,000 of a property’s assessed 1970 value in Mercer County.

The city’s earned income tax is 1.75 percent. Sharon City School District also collects a 0.5 percent wage tax.

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