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New Richmond proposes budget cuts

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news New Richmond, 54017
New Richmond Wisconsin 127 South Knowles Avenue 54017

An anticipated 7.9 percent hike in health insurance costs is making New Richmond's budget process a bit of a challenge this year.

But City Administrator Mike Darrow reported to the New Richmond City Council on Aug. 22 that he will still be recommending a 2013 budget that reduces overall spending by about 3.9 percent.

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During a special meeting of the council, Darrow presented a brief PowerPoint outlining the steps he and the city staff have taken to keep a lid on city taxes. The council previously directed city employees to identify possible budget cuts, in light of tough economic times.

Because of the rising health insurance premiums, Darrow said the recommendation is that the city not offer salary increases to employees next year. While no full-time positions were recommended to be cut, Darrow said several part-time, seasonal positions may need to be cut or scaled back.

The city is also instituting a new "idling" policy, encouraging employees to turn off their vehicles if they are going to be idling for more than two minutes. The only exception to that rule is emergency personnel. Darrow said the policy will likely result in less gas being consumed.

Another savings measure that is being instituted is a central purchasing policy to slim down the city's vendor list in an effort to negotiate better pricing for certain items.

With all of the proposed cuts, Darrow estimated that $230,000 could be slashed from the city's 2013 budget. Another $30,000 in savings would be realized if city staff members work on grants and studies instead of hiring the projects out to consultants, he noted.

If the estimates ring true, Darrow said the city could cut its levy by about 2.326 percent next year. The reduction meets the council's stated strategic goal for reducing taxes.

During his presentation, Darrow reported that the city's health insurance company (Wisconsin Public Power, Inc.) will be getting out of the business in 2014.

"They felt they could not be competitive in the future," Darrow explained, noting that federal reform has increased the uncertainty of future health care costs for many insurers.

The announcement will send the city and its 65 full-time employees scrambling to find a new carrier next year. Darrow said the city will explore various options for its health insurance coverage.

Darrow also spoke about the city's upcoming capital projects and borrowing that may be required to fund certain projects.

A renovation of the current fire hall is planned next year, at a cost of about $534,000. While municipalities that are part of the fire association will share in the cost of the project, Darrow said the city will have to finance the entire renovation and get reimbursed over a number of years.

That project, coupled with additional capital plans such as street improvements, economic development strategies and others, would require more than $750,000 in borrowing in 2013. Council members previously wanted to limit any new borrowing to no more than $500,000 a year, but Darrow said it might be a good idea to adjust that limit for one more year.

After 2014, Darrow said, he suggests the city start "saving" for projects and pay cash rather than borrow in the future. Elected officials have expressed an interest in reducing the city's overall debt and thus save taxpayer money.

A likely first project on the pay-as-you-go agenda would be a new public library in New Richmond, Darrow indicated.

With their tentative nod of approval to the preliminary budget, the council directed Darrow to work out the details. He will be meeting with employees and city committees to explain the budget plan and will return for the council's final approval later in the fall.

For the complete story, see this week's New Richmond News.

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