By Jerome Tharaud/Havre Daily Newsemail@example.com
A health insurance rate increase of 45 percent for city employees this year will mean that both employees on the plan and taxpayers will pay more.
The price increase has been set, but the exact amount of the tax increase has not yet been decided, said Tom Farnham, chair of the Finance Committee of the Havre City Council. The committee met Tuesday night for a budgeting session.
"We were very fortunate that we didn't have to raise insurance rates for 10 years, but it caught up to us after 9-11," Farnham told the committee. He said similar rate increases are happening all over the country.
Premiums increased 24 percent last year. Last year the city picked up the entire increase for single employees and half of the increase for employees with spouses or dependents. However, under a contract negotiated last year, the city picked up the entire increase for all members of the police bargaining unit. Negotiations with the police union on that point will reopen this year.
The city is also in the process of negotiating new contracts with firefighters and public works employees.
Farnham said the total rate increase will cost $136,000.
City Clerk Lowell Swenson said if the whole thing were levied, that would mean a tax increase of about 18 mills. Swenson said he found out Tuesday that the city's taxable valuation has decreased by about $250,000 this year, bringing the value of a mill down from $7,879 last year to about $7,628.
The city's total taxable valuation this year is $7.6 million.
City residents can find out how much an increase of nine mills will affect their taxes by multiplying the market value of their property by 0.034, and then multiplying it by 0.009.
The owner of a city property with a market value of $50,000 would see a tax increase of about $15 if half the rate increase is passed on to taxpayers. If the entire $136,000 were levied, it would cost the same property owner about $31.
Farnham said this morning he would like to levy for about half the amount.
A total of 88 city employees are on the city's health insurance plan, said city deputy clerk Annette Swinney. There are 33 single payers, 15 two-party groups, and 40 family policies. Two-party groups consist of the employee and one other person. Family groups are made up of the employee and at least two other people, Swinney said. That means at least 180 people will be affected by the rate increase.
The Finance Committee set the increases for all nonunion employees Tuesday night. All of them, from single rate payers to families, will see an increase in their monthly insurance premiums.
Single rate payers will see the biggest change. Previously, the city picked up 100 percent of the cost of a single insurance user, while only paying for two-thirds of the premiums of two-party users and family users.
This year, the total premium for a single nonunion employee will be $346.20 a month, up from $243.75 last year. The single user will pay $46.20 while the city pays $300.
The committee said the increase for single payers is a airness issue.
"With a 45 percent increase, we should have the single person pay something," committee member Rick Pierson said during the meeting.
Dick Letang, director of field services for the Montana Public Employees Association, said after the meeting that he is afraid that making single parties pay for insurance will hurt dependents in the end. He said that if single employees decide not to not to sign up for city insurance because of the cost, that would decrease the insurance pool and eventually drive up rates for everyone else.
"They're trying to save money, but they're really just increasing their expenses," he said.
Farnham said he doesn't think that's a risk because $46 for health insurance is still a good deal.
"I don't think they'll find much cheaper (elsewhere)," he said.
The premium for two-party users will increase from $487.50 a month to $699.60 a month. The employee will pay $233.30, an increase of about $80 a month.
The premium for family users will increase from $643.75 to $926.20. The employee's monthly cost will increase from $214.37 to $308.75, an increase of about $94.
Starting monthly pay for the lowest-grade full-time city worker is about $1,858 before taxes, Swenson said.
The changes will take effect retroactive to Aug 1. Farnham said an insurance committee, made up of one representative from each department in city government, will meet on Aug. 14 to try to reduce deductibles. Premiums may also be reduced in January, he said. Farnham chairs the insurance committee.