Flat salaries coupled with rising health care costs is a refrain ringing (does a refrain really ring?) through many workplaces these days.

It’s a tune that’s now reaching city hall.

Insurance costs for Fayetteville city workers are due to increase 7.5 percent next year, said Missy Leflar, Fayetteville human resources director. This translates to $240,000 a year. To offset these costs, half of the increase will be saddled by the employees.
“We would prefer to not pass on all of the cost to employees,” Leflar said.

Most of the premium increases are due to the city’s health insurance company paying out roughly $500,000 in health care costs beyond what it collected in premiums in 2009, Leflar noted.

The insurance cost increases are weighing more heavily on city officials, particularly since decreasing city revenue estimates have Fayetteville on course for a $2 million to $2.4 million budget shortfall by the end of the year, said Paul Becker, Fayetteville finance director. Employee salaries have already been frozen, and more budgetary cuts are likely. Fayetteville Mayor Lioneld Jordan expects he will soon ask the council to transfer money from the capital improvement program into the general fund to aid in funding daily operations. Fayetteville also has available several million dollars in reserve funds.

“And I’m telling y’all we’ve got some tough decisions to make in this next budget season coming up,” Jordan told the City Council during Tuesday’s agenda session. “We’ll be OK. We’ve seen tough times before and we’ll get through this.”

For the first six months of the year, Fayetteville’s sales tax collections were down 5.8 percent from what was projected, Becker said. This decrease translates to $769,972.

“Conditions haven’t really changed since the last time I came to you,” Becker told the council. And he expects revenue next year to be essentially flat, compared to this year.