MEMBER SIGN IN
Not a member? Become one today!
         iBerkshires     Williamstown Chamber     Williams College     Your Government     Land & Housing Debate
Search
Williamstown Finance Committee Votes $100,000 Budget Cut for FY23
By Stephen Dravis, iBerkshires Staff
04:02PM / Thursday, March 31, 2022
Print | Email  


WILLIAMSTOWN, Mass. — The town's fiscal 2023 budget will not account for an increase in the town's health insurance costs after the Finance Committee on Wednesday directed the town manager to slash the line item for health insurance by $100,000.
 
Interim Town Manager Charlie Blanchard had budgeted for the cost increase after Berkshire Health Group announced that it needed to raise premiums it passes along to member municipal entities by 8 percent in the next fiscal year.
 
To help cushion the blow to the 31 towns and school districts it serves, the BHG board in January voted to give its members a one-month "premium holiday" in FY23 and cover the difference with the health insurance buying cooperative's reserve funds.
 
Since one month equates to about 8 percent of the year, the net bill to member municipal entities would be the same in FY22 and FY23, if they opt to rely on the one-time "holiday" rather than raise and appropriate enough money to cover the rising cost of health insurance.
 
That is a strategy employed by two of the entities who pass along health insurance costs to local taxpayers through their own assessments: the Northern Berkshire Regional Vocational School District and Mount Greylock Regional School District.
 
Berkshire Health Group's reserves, while ample, are not infinite, and in its board's January discussion it was clear that such premium holidays cannot continue indefinitely. Increases in the cost of health care, on the other hand, could continue indefinitely.
 
That means that if BHG next year imposes a 2 percent hike in premiums but does not offer a holiday, Williamstown's cost would go up by 10 percent from FY22 (the current fiscal year) to FY24.
 
Blanchard, whose term at Town Hall ends in April and who will not be around to see spikes in FY24 or beyond, nevertheless attempted to budget for the increase in FY23 without relying on the offered reserve payout from Berkshire Health Group.
 
He explained that strategy when the Finance Committee initially looked at benefits costs a couple of weeks ago and again on Wednesday night.
 
"They're indicating that the proper rate for this now is 8 percent," Blanchard said. "We've had several years with no increase at all. They're saying, 8 percent is what you need to have in there. And they're saying, to ramp this up, we're going to give you a premium holiday. We've also had premium holidays in past years, and there is one this year as well.
 
"We put in the 8 percent [in the proposed budget] because that is the level that this should be at in the future."
 
Blanchard said the $100,000 "rebate" from Berkshire Health Group would then fall to the town's free cash account, which the town historically has used to offset tax increases in future years.
 
In a year when the total tax levy is increasing for a number of other reasons, the Finance Committee members decided health insurance was one area where it could provide property taxpayers some relief in FY23.
 
"Why would we spend money that we don't have to spend?" Fin Comm member Michael Sussman asked Blanchard.
 
"Better put, why would we tax?" Fred Puddester added.
 
Blanchard favored more of a "pay as you go" approach while recognizing that his budget would, if approved, add about $100,000 to the town's free cash reserve.
 
"The concern I have is, as I mentioned, because we know at some point that has to be there to make this whole budget work with Berkshire Health Group, if they don't do that premium holiday next year, we're up that 8 percent, and if they have even a small increase of 2 percent, you're up to [10 percent]," Blanchard said. "Maybe a possibility, to recognize that future premiums will have to go up, is to put a 4 percent increase in there rather than nothing.
 
"It's really your decision. Both the McCann school and the [Mount Greylock] regional school have decided to do it that way. That is not the way I would recommend doing it."
 
Mount Greylock Regional School Assistant Superintendent of Business and Finance Joe Bergeron on Wednesday acknowledged that the preK-12 school district will, at some point, have to reckon with the 8 percent increase it is putting off in its FY23 spending plan.
 
"The net impact of the 8 percent premium increase along with the 1/12th savings on total premiums paid into the system means we're currently not budgeting in fiscal '23 for an increase, but we know that in FY24, we need to be mindful of what happens when a premium holiday evaporates and, perhaps, you see a premium increase on top of the 8 percent increase," Bergeron said. "That's something we're very mindful of, but we're trying to take advantage of the way the health group has set us up for fiscal '23."
 
Bergeron and Superintendent Jake McCandless were at Town Hall on Wednesday to present the regional school district's budget to the Fin Comm, repeating a process that played out in Lanesborough last week.
 
Bergeron, who represents the Mount Greylock district on the Berkshire Health Group Board, said BHG's reserves currently stand at about $23 million, of which the premium holiday is expected to consume about $3 million (13 percent).
 
By utilizing the entire premium holiday in the coming fiscal year, Finance Committee Chair Melissa Cragg calculated that the town's total tax levy, which would have gone up by 4.1 percent under Blanchard's budget as proposed, will instead rise by 3.7 percent.
 
"The consequence of that is that when whoever is on this board next year comes back and discusses the 2024 budget, there is going to be a big increase in that number next year, potentially, because you're losing the premium holiday, and if there is some further increase, what would be a normal yearly increase will suddenly boost this reduced number by quite a bit," said Dan Caplinger, who made the motion to have Blanchard trim the budget. "But in the meantime, we will have saved taxpayers $100,000, and that's what I'm trying to do."
 
The Finance Committee voted 9-0 to have Blanchard remove any increase in the town's FY23 budget to account for the 8 percent premium hike and instead rely entirely on the premium holiday.
 
A half hour later, the committee discussed the projected water and sewer rates for FY23.
 
The former is projected to rise 15 cents per unit, from $3.70 to $3.85 – a jump of 4 percent from FY22. The latter is expected to rise to $7.52 (from $5.95) for residents on the Hoosac Water Quality District system and to $7.28 (from $5.61) for residents on the Cold Spring Road Sanitary Sewer District.
 
Together, rates for the two enterprise funds (water and sewer) are expected to go up by 18 percent or 20 percent, depending on which sewer system a resident uses. 
 
Part of the increase is due to greater costs to deliver services. Part of it stems from Blanchard's decision to rely less on spending from reserves that has helped keep rates low.
 
The water rate actually went down by 15 cents from FY19 to FY20 and stayed level for three years. The sewer rates dropped from FY19 to FY22 – less than a percent in the Hoosac Water Quality District and 6 percent in the Cold Spring Road district.
 
In the same time period, the free cash reserve in the sewer enterprise fund has fallen from just more than $1 million on July 1, 2019, to a projected balance of $245,803 on July 1 of this year, a drop of 76 percent.
 
Longtime Fin Comm member Elaine Neeley said the town might get some pushback at town meeting about the large percentage jump from FY22 to FY23.
 
"The increase should have been more incremental," said Blanchard, who was hired last April and had no role in the FY23 budget passed at last May's annual town meeting.
 
Cragg said she agreed with Neeley that members of the town meeting may object to the rate spike.
 
"We can continue with the free ride until we run out of free cash, and then they'll get a big bill," Puddester said.
Comments
More Featured Stories
Williamstown.com is owned and operated by: Boxcar Media 102 Main Sreet, North Adams, MA 01247 -- T. 413-663-3384
© 2011 Boxcar Media LLC - All rights reserved