By SUE SUCHYTA
Sunday Times Newspapers
MELVINDALE – City Manager Richard Ortiz said the city’s deficit elimination plan will depend heavily on health care savings and police department cost efficiencies realized by merging with Dearborn’s centralized police dispatch.
Ortiz said at the Nov. 14 City Council study session that the state has requested the city to submit another deficit elimination plan for the next two years, since the city’s $1 million budget deficit will not be eliminated this year.
“There is no guarantee that they will approve it,” Ortiz said. “Our five-year plan is up this year, which we did not eliminate. So they reached out to us and said, ‘Send us something, a council resolution.’”
Ortiz said since the police collective bargaining agreement has not yet been reached, the numbers are based on a reasonable estimate, and all other costs are relatively the same.
He said he assumed a 1 percent increase in revenue based on anticipated tax income.
Ortiz said while city employee medical expense costs may increase 2 percent, he expects to realize a $175,000 savings this coming year.
“The problem we had was with medical, since switching our plan to a high deductible plan on Jan. 1, 2015, with one plan for pre-65, and Medicare Part B for post-65,” Ortiz said. “It was expected to save the city a substantial amount of money in medical. The city has been unlucky the last two years. You can’t control that cost.”
He said this year’s medical costs were up, and they have reviewed them. He said going forward, some of the high cost recipients are no longer with the city’s employees, may have already passed, or have left the plan.
“Unless we get ‘unlucky’ next year, the high cost that happened this year definitely can’t affect us next year,” Ortiz said, “unless somebody else – two or three or four people – end up having some major issues.”
He said the first year they hit the “stop loss,” and last year they just missed hitting the stop loss, which is a coverage for entities that self-fund their employee health benefit plans if claims exceed a certain threshold.
Ortiz said the other major change in the deficit elimination plan is associated with central dispatch, which he said he has discussed with Police Chief John Allen and Lt. Dan Jones.
“The restructure has to go through the union still, and the staffing is where we are going to see (savings),” he said. “We don’t have all those numbers yet. But conservatively we believe there will be $150,000 a year savings.”
He said in 2017 the savings would be pro-rated to $100,000 because centralized dispatch would not take effect until about May 1, 2017.
Ortiz said a reduction in medical expenses combined with the centralized dispatch should eliminate the city’s $1 million deficit by the end of 2018.
He said there are some property sales for which it is not known when the city will receive payment.
Ortiz said Jones told him that police overtime has cost the city $300,000 to $350,000 per year. He said as they merge with Dearborn’s centralized dispatch, the City Council will have many decisions to make about the Police Department, including hours of operation in the city, civilian staffing, and the number of police officers.
Ortiz said they anticipate that the significant reduction of overtime will be offset by raises.
(Sue Suchyta can be reached at firstname.lastname@example.org.)