BATAVIA – The City Council’s monthly conference session Monday was more like a classroom, with members learning bitter lessons from Albany: The city must deal with smothering state retirement fund costs and a complicated 2 percent cap on total tax income.
In a six-month review of the city’s $23 million 2012-13 budget, City Manager Jason R. Molino said next year’s payment to the retirement system will be up 44 percent, or more than a half-million dollars over the current year.
The city, which has reduced employment in the past six years by 32 to 133 full-time workers, will pay nearly $8 million in wages, $1.6 million to the state retirement system and $1.15 million for medical insurance.
The primary challenges facing the next budget, Molino told the Council, “are a sum of unfunded state mandates, both retirement and health insurance for retirees and staff.” Molino said the retirement cost of an employee has risen in six years from $5,000 to $12,400.
Health insurance has increased 16 percent or $256,000 in one year.
Molino explained that in 2006-07, wage costs were up 80 percent and retirement and health care were up 10 percent each. In next year’s budget, he added, wage costs are up 70 percent and benefits are up 30 percent.
The Council was asked to transfer funds to both a retirement reserve and a workers’ compensation fund to make up for the shortfall. The city’s fiscal year begins April 1.
The Council also reviewed the second year of the state’s Real Property Tax Levy Limit, which holds spending increases to 2 percent or the rate of inflation without an override vote, which in Batavia’s case would be six of nine Council members.
To meet this requirement, the city must enhance its tax base through reuse and new developments, including residential. There is also a need to generate adequate surpluses over the next three to five years, the report said.