Hickory City Council hears money-saving plan

HICKORY, N.C. — The early retirement package that will be offered to 84 City of Hickory employees is one facet of a plan to save money over the next two budget years.

“There is not a lot we can do on the revenue side, so we must look at the expenditure side,” Assistant City Manager Warren Wood told the City Council at its Tuesday night meeting. He said putting together the 2012-13 city budget “will be difficult.” That budget must be in place by July 1.

Wood labeled the following year’s budget as “even more difficult.”

The city expects to lose up to $425,000 in state revenue next year. Money for local government was cut in the current biennial state budget.

Also, a grant program that provided Hickory with 12 additional firefighters is expiring, and the city must take on 100 percent of the firefighters’ pay. The city’s portion of the 12 firefighters’ salaries increased incrementally during multi-year grant’s term.

Wood said the city staff expects slow growth in property and sales tax revenues, plus increased costs for fuel.

That forces Hickory to look at ways to cut expenses, he said.

Among the proposals is the early retirement incentive. The city would pay one-half of the annual pay for employees qualifying under state retirement guidelines. The employees would remain on the city’s insurance plan for six months. An employee eligible for Medicare would not be extended city insurance.

Wood admitted that Hickory would lose a lot of experience if the eligible employees opt to retire and that their younger replacements would make less money. But, he said, the city could use the payroll savings.

The City Council unanimously approved offering early retirement.

The remaining strategies will be considered when the 2012-13 budget is deliberated later this spring. They include:

* Funding the gap in the 5-year capital improvement plan from the city’s fund balance. The gap is estimated at between $2 million and $2.5 million. Projects the city has initiated include the purchase of new fire trucks, sanitation vehicles, new lighting for LP Frans Stadium, bridge replacement and replacing breathing apparatus for the fire department. The city began 2011-12 with approximately $12 million in the undesignated fund balance.

Wood said money coming from the fund balance will not be used for new projects but to close out existing ones. “The city has a healthy fund balance,” he said.

* Initiate a compliance-based health insurance program. Wood said employees whose annual health assessments reveal health risks – he mentioned high blood pressure and high cholesterol – then “You must take steps to remedy the problem.” Failure to do so could lead to higher individual cost for insurance. Wood said requiring employees to address potential health problems will save on insurance premiums.

* Debt refinancing could save Hickory up to $700,000 over the next 15 years, Wood said.

* Eliminate or reassign positions and reorganize some city functions and departments.

One of the elements of the retirement initiative is that the positions be left unfilled for six months so the city can recoup the payouts.

Twenty employees opted for early retirement when it was offered in 2009. Hickory employees have until Sept. 19 to decide if they will retire early.

In another matter, the City Council voted to award the contract for the new fuel farm at Hickory Regional Airport to Eaglewood Inc. of Denver, NC. The $778,252 contract will be split between the state and the city, with the city’s share totaling $77,825.

WSOC