City to consider cost-cutting measures Tuesday

Mayor A.J. Holloway will be asking the City Council to approve two cost-cutting measures on Tuesday: rolling back the city’s longevity pay program from $15 to $6 a month and having employees pay a share of healthcare premiums that are now totally paid by the city.

The city’s finances and the cost-cutting proposals will be discussed during the City Council’s 1:30 p.m. meeting.

Under the plan, single employees would pay $100 a month while employees with dependents would pay $200 a month. Currently, Biloxi taxpayers totally fund the program, which costs $5,000 for single employees and $13,400 for employees with family coverage.

The two measures, if approved, would save the city a total of $2.1 million annually.

Based on current revenue projections and expenditures, Holloway and Director of Administration David Staehling would like to see the city reduce operating expenses by nearly $5 million to offset several years of deficit budgeting, which have reduced the city’s reserves.

“We’d like to get as close to that $5 million figure as we can,” Holloway said. “We know it’s not going to happen overnight and we know it’s not going to be popular, but we need to start now. Another thing to keep in mind is that this $5 million figure is not set in stone. It’s based on what we’re seeing right now. It could go higher or it could go lower, depending on our revenue streams. The only thing certain is that we cannot continue the way we are — spending more than we’re taking in.”

Most of the increases in spending have occurred post-Katrina, mainly in employee pay and benefits.

In 2007, a $4,600 across-the-board employee pay increase added $4 million annually to the city’s operating costs. A year later, the longevity program — an incentive designed to retain long-serving municipal employees — was increased from $6 to $15 for each month of service, and employees were awarded a $1,600 across-the-board pay increase. Those two measures added another $2.2 million annually to the city’s operating costs. At the same time, the city’s employee insurance costs increased by $2 million, from $5.3 million in 2007 to $7.3 million in 2009.

Other cost-cutting measures that have been discussed with the council have not been ruled out, Holloway said. Among them: a change in insurance deductibles and employee furloughs. If each employee were furloughed for one day a month — a day off without pay — the city would reduce operating expenses by $1.2 million annually.

Also expected to be part of the presentation Tuesday morning are the city’s accounting firm and heath insurers, who will present financial data and recommendations.

“This is a matter of the mayor, the director of the Department of Administration, the certified public accountants and the insurers all providing factual information and recommendations,” Staehling said. “It’s a matter of taking action now or come September, when we’re in the throes of working on a new budget, we’ll have limited options. None will be easy, and all will be painful.”