Cost Centers and Priorities

Most City departments will tell you that over 60% of their budgets are basically set before we even start the budget process.  As has been noted, the City's seven bargaining units comprise approximately 120 employees, and absorb a little over sixty percent of resources for their performance under contracted compensation terms.

When you look at employee costs, then add volatile cost centers like fuel (up over 30% since last year at this time) and power, now you're getting closer to 70%.  Finally, cap off major costs with mandated debt service payments, and departments have little to work with in terms of discretionary funding.

This week, City Council took a look at major cost centers, and began discussions about delivering core services, priorities for discretionary funds, and preferences for other potential support.

Personnel costs are the most significant of all our operational costs.  This year, nearly $9.8 million is currently forecast for costs including salaries and other compensation, health insurance costs for employees and retirees, and state retirement contributions.  While compensation costs are up slightly, the City saw a dramatic reduction in costs associated with health care benefits, thanks to our participation in the Finger Lakes Municipal Insurance Trust--a cooperative arrangement between 10 Finger Lakes municipalities to pool risk and experience in exchange for lower insurance premiums.  State retirement is up sharply this year, the cost of which is mandated by the State Retirement System.

As noted, fuel is up sharply from last year, as staff is forecasting a 30% increase over 2011 costs.  Thanks to capital investment by the City, we are aniticipating no growth in electricity costs, a traditionally volatile cost center.  The City's debt load is also anticipated to remain flat, at around $2 million next year.  Several smaller issues are anticipated to roll off the debt sheet, with new projects on Norwood, Sharon, Cross and Lewis coming into play for debt service next year.

View the City Manager's cost presentation here.