For six years, Tim Wheeler has worked as a temporary employee for Akron’s sanitation department, hoping to get hired full time.
He works 40 hours a week for 18 months, is laid off for 90 days and then returns to work.
Now, Wheeler has learned that his hours could be cut because of a requirement in the federal health-care law that employers provide health care to employees who average more than 30 hours a week. Akron recently sent a memo to temporary, seasonal and part-time employees, telling them the city couldn’t afford to cover their health care, and is looking at how to respond.
“I was shocked, to be honest,” said Wheeler, 46, a life-long Akron resident. “I don’t think anything good is going to come out of it. I don’t know how to live on 29 hours a week.”
Akron’s notice to approximately 300 temporary, seasonal and part-time employees it employed in the past year came as the city is going through its annual operating budget process, which provides a road map for spending and revenue for the coming year.
The city’s proposed budget for 2013 includes a mixture of good and bad. Akron is giving raises to all of its employees, is expecting income taxes and property taxes to be up again, and is hiring firefighters and police officers, with the bulk of the salaries paid with federal grants. On the other hand, the city is again expecting a significant loss in state funding, is grappling with a significant increase in health-care costs, and is trying to figure out what the changes in the federal health-care law will mean for its bottom line.
“Keep in mind: We are revenue challenged,” Finance Director Diane Miller-Dawson told Akron City Council members during a recent budget hearing.
City Council, which has had budget hearings over the past several weeks, is expected to vote on the proposed $493 million budget Monday.
Revenue
Akron’s major source of revenue — income taxes — is up, but the funding the city gets from the state has been plummeting.
Budget highlights include:
• The proposed overall budget for 2013 is down by about $4.9 million from the actual budget for last year, which ended up at about $498 million.
• The general fund is expected to go up about $1.4 million from last year to about $145 million.
• The city ended 2012 with a carryover of about $5 million, down more than $240,000 from the ending balance in 2011. The city is projecting a carryover for the end of this year that is about the same.
• The city is projecting income taxes to be up 2 percent, property taxes to rise 2.6 percent, but local government funds from the state to dip 23 percent.
• The state ended the estate tax on Dec. 31 that provided Akron with an average of $4.2 million a year.
Miller-Dawson is estimating the city will still receive $1 million in estate taxes this year from people who died last year, but whose estates aren’t settled until this year. She is projecting this revenue will dry up next year.
“The problem is the constant drain from resources we were used to getting from the state,” Miller-Dawson said.
The state had claimed that the loss in funds to local governments would be made up by casino money, but the casino funds haven’t been as much as was anticipated. Akron received $705,000 in casino funds last year and is expected to get $2.5 million this year, Miller-Dawson said.
Akron is hiring 38 new firefighters and 40 police this year, largely thanks to federal grants, Miller-Dawson said.
Spending
The city is spending significantly more on salaries this year because of a raise given to all union and nonunion workers, the result of a historic pact agreed to by Mayor Don Plusquellic and the presidents of the city’s four unions last fall.
In the interest of avoiding long and costly negotiations, Plusquellic and the union presidents approved a pact that provided raises over the next three years, while leaving other contact language alone.
The American Federation of State, County and Municipal Employees, the Civil Service Personnel Association and the police and fire unions received raises of 2 percent this year. The unions also will receive raises of 1 percent in 2014 and 2015 with potential bonuses of up to 2 percent in 2014 and 2015, contingent on city income tax revenue.
The raises also were extended to all nonunion employees, including Plusquellic, his cabinet and council members.
The city’s spending on snow and ice also are up this year over last year, when winter in the Akron area was relatively mild.
Akron has so far spent about $3 million on snow and ice this year, about double the amount from last year. The city spent far more in other recent winter seasons, though, including $6 million in 2010, said Public Service Director John Moore.
Health-care costs are expected to be up for the city by 5 to 10 percent this year, with 10 percent equating to $2.5 million. A joint committee of city and union leaders has begun meeting monthly to try to come up with creative ways to address rising medical-care costs. So far, the committee hasn’t developed any concrete plans.
Health care
Akron, like other employers also is trying to understand how it will be impacted by the federal health-care law.
Miller-Dawson said this is particularly challenging because many of the rules for the law, called the Affordable Care Act, are still being written.
The city has figured out that it will be among the employers affected by a requirement that employers with more than 50 employees provide medical benefits to people who work more than 30 hours per week on average, which includes part-time, seasonal and temporary employees who don’t currently get this benefit. In January 2014, employers must look back at the past six months to see which employees qualify for coverage.
“Our goal is to not get caught in a situation that will cost the city additional money,” Miller-Dawson said.
Akron’s department heads are studying their staffing and coming up with a plan. Some employees likely will have their hours cut, while others might not be affected because they already average less than 30 hours, Miller-Dawson said.
George Johnson, president of Akron’s AFSCME chapter, which counts about 55 temporary, seasonal and part-time employees among its 386 members, thinks the city is in a worse situation than it would have been if it hadn’t been relying so much on these employees and had hired more full time. He said he has some members who have worked for the city on a temporary, seasonal or part-time basis for as long as 19 years.
“We have been going back and forth with the city for the last 15 years,” he said. “We were never able to reach any reasonable solutions. Now, the Affordable Care Act has rocked that whole setup.”
Deputy Mayor Rick Merolla, the former public service director, said some jobs are only seasonal, like snow and ice removal or leaf pickups, and the city couldn’t afford to have these employees on staff year-round.
“We have to make the best decisions to provide service at the most affordable price,” he said.
Moore, the current public service director, said he’d love it if the city could bump more employees up to full time, but doesn’t think this is financially feasible, beyond a few hires.
Wheeler is holding out hope that, if the city does hire anyone, he’ll be among them. He is fourth on the civil service list.
“That’s the reason I went there — a good, steady job with good retirement and health-care benefits,” he said. “Those kinds of jobs are hard to find these days.”
Stephanie Warsmith can be reached at 330-996-3705 or swarsmith@thebeaconjournal.com.
