By Beth LaMontagne Hall
The New Hampshire Union Leader
MANCHESTER, N.H. — Despite a Finance Department report that shows the city will end the year with a budget surplus, health care costs are running $685,000 over budget in the first four months of the fiscal year.
“There’s no question we are overspending our budget,” Manchester Finance Director Bill Sanders said.
Health care spending isn’t the only budget problem facing the city.
Fire Chief James Burkush alerted the aldermen in a letter sent Nov. 5 that his department is now facing a projected $646,000 shortfall that could mean layoffs and fire station closures if the aldermen do not appropriate more money.
The city budget as a whole is expected to close with a $305,000 surplus, Sanders told the Committee on Accounts, Enrollments and Revenue Administration on Monday.
The additional money comes from slight increase in revenues, particularly building permits, as well as surpluses in the Assessors Office, Finance Department, Police Department, Office of Youth Services and Economic Development Office.
Sanders said the city is in fairly good financial shape, but a string of bad snow storms would mean additional overtime and road treatment costs, eating away the surplus in a matter of weeks.
The health insurance shortfall could be made up by tapping the city’s Health Insurance Reserve Account, which currently has a $3.5 million balance, said Sanders.
Rising health care costs have plagued the city in recent years; bringing them under control has been a focus of Mayor Ted Gatsas.
He recently approached city unions about changing their contractual health benefits to save taxpayer money and prevent up to 300 layoffs. The unions met with Gatsas again Friday and are planning to meet with city health care administrators to examine costs and locate potential savings before opening their contracts.
The full Board of Mayor and Aldermen is scheduled to discuss the budget projections Tuesday at 7:30 p.m., including the Fire Department shortfall. In October, Burkush told the aldermen his department will end the fiscal year with a projected $504,000 shortfall due to increased vacation buy-backs, overtime and sick leave payouts.
When the mayor and aldermen finalized the budget last year, they allotted for six department retirements, which would have saved $270,000 in salaries. Since no one from the Fire Department has submitted plans to retire, those salaries must now be accounted for in the fire budget.
A bright spot in the budget projections was the Police Department’s ability to turn a $129,000 shortfall into a $5,200 surplus, thanks in part to additional officers announcing their plans to retire.
Although this brought the department’s costs down, Sanders said, it drew money from the city’s severance fund, which is used to pay out unused sick leave and vacation time to retirees. The severance fund is now down to $145,000.
Alderman Jim Roy said that although retirements ease the salary burden on departments, the city must still issue payouts from a dwindling fund.
“The answer isn’t a mass exodus of employees,” said Roy. If 20 more people were to retire this year, Roy added, the city might not have the money to pay their severance.
The potential layoffs and fire station closures could also impact the aldermen’s discussion about the proposed $2.3 million fire station on Hackett Hill Road near the proposed Northwest Business Park.
Earlier this year, the aldermen agreed to sign over city-owned land on Hackett Hill to developer Richard Danais in exchange for paying for a new fire station.
Danais has proposed building warehousing and distribution space business park on the 124-acre plot in northwest Manchester.
Gatsas has prepared financial information on the fire station for the board to discuss at Tuesday’s meeting.
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