Pay raises for city employees?

The Seymour City Council Finance Committee is looking at ways to increase the 2017 budget to allow for a 2 to 3 percent increase in salaries for all city employees next year.

Officials also are discussing offering a greater financial incentive to keep more veteran police officers on third shift and possibly switching to a high-deductible health insurance plan for employees to curb rising costs.

To come up with the salary increases, cuts may have to be made in other areas, or some capital expenses, such as equipment and vehicles, will likely be funded from other sources, such as the cumulative capital development fund or with cash reserves, officials said.

The finance committee, which is made up of council President Jim Rebber, chairman Lloyd Hudson and Councilman John Reinhart, has met twice so far, but the budget process is still in its earliest phases, said Mayor Craig Luedeman.

He said a public hearing and adoption of the 2017 budget will take place in October.

The first step is determining how much of a raise, if any, the city can afford to give employees with projected revenue.

Last year, city council adopted a budget that included a 2 percent increase in employee salaries. For 2017, officials hope to be able to make that 2.5 percent.

That will require officials to cut an estimated $587,800 from the budget, Luedeman said. The amount could be less if council decides not to save any money.

“I always hold back anywhere from 3 to 5 percent in the budget just so we have a guaranteed cash builder,” Luedeman said. “You don’t have to hold back any cash if you don’t want to, but I tend to be a little conservative.”

He also expects projected revenue will go up some when more accurate assessed valuation figures are available.

Rebber said without the cash reserves the city has had in the past, he didn’t feel comfortable recommending a 3 percent raise, which would require cutting $624,564 from the budget.

“If we can cut enough out of the budget and still give 2.5 percent, that would be my preference,” Rebber said.

Luedeman agreed even though he said the 2 percent would be more “conservative.”

Overall, the general fund budget is being projected at an 8 percent increase over 2016, but Luedeman said it won’t be that high before the budget is approved.

“I think we can move enough around to cut $587,000,” he said. “There’s two or three things that could change some of this.”

One factor that would impact the city’s budget is if the county passes a local option income tax to generate revenue for public safety.

“That could offset a bunch of stuff,” Luedeman said.

The city is expected to receive $1.4 million in LOIT revenue if the tax is enacted, but that money will come monthly instead of twice a year like property tax distributions.

Police officer and firefighter salaries are negotiated through the collective bargaining process between the city and those two departments’ unions.

Last year, instead of a 2 percent raise, each officer and firefighter received $1,000. But Luedeman said the department is struggling to keep officers of a higher rank working on third shift because there’s not enough of a difference in pay to make it worth it.

“We’ve had several people in the last few years turn in their sergeant stripes or their corporal stripes just because the offset isn’t enough to want to be in charge, especially at night,” Luedeman said.

With the current average age of officers on the force, Luedeman said a night sergeant or corporal may have to wait 25 years before ever having the option of going to day shift.

“There are guys saying, ‘I could go straight to days if I give up my stripes and never have to worry about it again,’” Luedeman said.

Reinhart said he doesn’t think the focus needs to be on rank as much as it does on the shift being worked.

“The patrolmen deserve it, too,” he said of having an increased incentive to work nights. Currently, third shift officers receive $1,500 more annually as a shift differential.

Luedeman said local factories offer as high as 20 to 30 percent pay difference to get people to work third shift.

With only so much money to give to the police department, Rebber said the negotiators will have to determine how that money is used to solve the problem. He said that may take time to establish.

Rebber said another solution would be to go to rotating shifts so that all officers work both day and night shifts during the year.

Besides salary raises and possibly increasing the third shift premiums for police officers, council also has to take into consideration its employee health insurance costs, which the city struggles with every year.

In the 2017 budget, Luedeman said $1.8 million is budgeted for health insurance.

“My goal is to go to a tiered system where you have a high deductible,” he said.

Although he doesn’t have exact numbers to show the savings for the city, he is hoping a quarter of employees switch to that type of health insurance plan.

“We’ll see a minimum of $400,000 a year savings right off the bat,” he said.

To help with the transition, Luedeman said the city would contribute money into a health savings account for those employees who switch to the high-deductible plan. The HSA can be accessed to help reach the deductible and can be used to purchase health-related items, such as aspirin and bandages.

Employees also will pay lower monthly premiums by switching to the high-deducible plan, Luedeman said.