Budget fix may include staff pay cut

The Morgan City Council is considering slashing all city employees’ salaries by 2 percent.

Also, the governing body is contemplating freezing an annual 2 percent cost-of-living pay raise for all non-civil service employees.

Morgan City Mayor Tim Matte said in late September, the city is experiencing a budget shortfall, and it simply does not have the funds to pay for retirement and hospitalization costs for its firemen and police.

“A level revenue projection at a time of ever-increasing expenses presents us with a meticulous challenge in properly funding our continuing city services,” he said.

Matte said during the past fiscal year, the city budget was hit with large increases in retirement plan and other benefit costs. He said the city’s retirement plan costs for 2011 exceed 2010’s figures by approximately $247,000, while hospitalization costs exceed expenses for 2010 by $145,000.

“This created the challenge of funding the current staff at existing levels without any additional revenue to cover these increasing costs,” he said.

In order to cover the shortfall, Matte is proposing eliminating the 2 percent longevity raise for 2011, which would save approximately $150,000.

He also wants to cut the salaries of all city employees’ base pay by 2 percent. The move will save the city $130,000, Matte projected..

“The result of these budgeted reductions will impact the families of those that we employ,” the mayor said. “I have presented 14 budgets in my years as mayor and have always been in a position to fund the 2 percent longevity raise.

“Unfortunately, at the present time, facing the uncontrollable increases in costs, we have no choice but to make these reductions,” he added.

Morgan City employs just shy of 200 non-civil service employees. It has 51 civil service workers on the payroll.

A non-civil service employee who asked not to be identified questioned why councilmen didn’t pursue adding a $1 or $2 fee to city utility bills to help cover the cost of the retirement and hospitalization costs for firemen and police.

“This is done in other cities, I just don’t understand why we can’t do it here,” the employee said.

Another staffer wondered aloud why his pay had to be cut.

“It has always been my philosophy to make sure that recurring expenditures are provided for by recurring revenue,” Matte said.

The 2011 Morgan City budget calls for $37.1 million in revenues to be collected, with $36.7 million in expenditures expected.

The utility system generates most of the city’s cash flow. In 2009, the city council approved a utility rate hike – Morgan City’s first in more than 20 years.

However, Matte said increasing the rates would not provide the revenue needed to cover the benefits’ hike.

“The increases in utilities have improved the finances and operations of the utility system. They are indeed allowing us to transfer profits over to the general fund, but generally at the same level as before,” Matte explained. “The problem we have encountered is that in the past few years, we were transferring more than we were making in the utility system.”

Ironically, the Morgan City Council hiked residential garbage fees by $1 last week. The rate increase takes affect this month.

“See what I mean,” the staffer who questioned the Matte’s proposed worker pay cut. “The council does what’s safe.”