[06/28/01] Vicksburg officials were told Wednesday that the actual cost of payroll and medical benefits will be about $1.7 million more than allocated in the city budget that ends Sept. 30.

Along with the $1.8 million difference between revenue in the gas department and the actual cost of natural gas, the differences could force the administration that takes office Sunday to dip into city reserves to the tune of $3.5 million.

Figures provided by city accountant John Smith indicate actual costs in the city’s self-insured health plan are running about $1 million above expectations and that about $500,000 more than expected has been spent for overtime for police officers. The remaining $200,000 spent over the budget was from various expenses described as unexpected.

Mayor Robert Walker, defeated in the June 5 general election, said the board will take up budget amendments Friday at its last meeting and will correct problems.

“In the case of the insurance costs, that’s just something that you can’t predict,” Walker said. “This is not unusual.”

Vicksburg operates on fiscal years that end Sept. 30 and start Oct. 1, meaning the projecting of income and planning of expenses is something new boards must address early in their terms.

This year’s budget allocates about $15.8 million for payroll and related expenses and was approved in a 2-1 vote in September.

South Ward Alderman Sam Habeeb, who has voted against every city budget since he took office in 1997, said the problems facing the city now are those he has pointed out every year at budget time.

“I’m pretty disgusted about this,” Habeeb said. “I warned about this nearly a year ago.”

Habeeb said that the problems with the city $30.2 million budget began last September when the accounting office was asked to increase the revenue estimate from $22.4 million to $23.2 million to comply with the mayor’s request that spending be “within revenues.” Smith, the record shows, had also told board members that the $1.3 million allocated to health insurance would fall short because the city had spent $1.9 million the previous year. Those realities were ignored, Habeeb said.

Since the start of the fiscal year, the city has spent $1.5 million for the health costs of the city’s 545 employees. It is projected that before the end of the fiscal year the city will have spent $2.1 million for insurance.

While that is $200,000 more than the previous year, it is nearly a million dollars more than what was budgeted by Walker and North Ward Alderman Gertrude Young.

“We all were very well informed that health care costs were up,” Habeeb said.

Habeeb, who did not seek a second term, and Walker will leave office Sunday when the new administration is sworn in. Young, who will begin her third consecutive term, was not available.

Mayor-elect Laurence Leyens said he was also told about the budget problems Wednesday and planned to meet with city officials Thursday morning.

“If we have to start cutting budgets and staffing then we’re going to do it,” Leyens said.

Another option that officials can consider is tapping the city’s $7 million general cash reserve to fund the payroll expenses. The gas department has a separate $2.7 million cash reserve fund.

Vicksburg Police Chief Mitchell Dent said that the $500,000 spent for overtime was due to staffing problems. He said that there are 106 officers while the department is budgeted for 108, but overtime was still needed.

“For a while we were down from that and we had to have officers work overtime to fill in the shifts,” Dent said.

City budgets and staffing have been growing since gambling arrived in Vicksburg in the early 1990s. The city’s budget tripled since 1990 when it was $9.6 million.

During that same time period, the number of police has grown from about 60 sworn officers in 1990 when the city annexed additional territory north and south of the municipal limits.

“Overtime (in the police department) has been a real problem for some time,” Habeeb said. “It is up to the chief to manage that.”

Walker said that the budget matter will be corrected before he leaves office, but Habeeb said that it will ultimately be up to the new administration to deal with the budget.

“While there is a concern, the steps will be taken to correct this,” Walker said.

No action has been taken by the board members to address expected shortfalls in the gas department’s revenue. During the past winter when gas prices nearly tripled, city officials used $2.7 million in cash reserves to avoid a rate increase. The decision kept bills down, but also depleted reserves.

Vicksburg has entered a fixed rate contract for gas supplies for the coming year. While that contract assures a steady supply with no price surges, current gas rates charged to customers are not sufficient to pay the fixed-rate cost.