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Members of the St. Marys City Council continued their discussion on the city's 2011 budget on Thursday evening, making a number of cuts in an effort to reduce the budget deficit and the resulting tax increase that would be imposed on city residents.
According to Carol Muhitch, city finance director, if the budget were to be approved as it is right now, city residents would likely be facing around a $138 increase to their real estate property tax in 2011.
There are three main areas that have caused the deficit in this year's budget: a decrease in the market value of the investments in the city's pension funds in 2007 and 2008, an increase in the cost of hospitalization and a proposed three percent wage increase for city employees.
The pension fund deficit has had the biggest impact on the budget, by itself creating a deficit of 1.54 mills.
Muhitch explained that even though the pension deficit occurred in 2007 and 2008, it takes time for the evaluation to be completed by the city's actuary and the effects will only begin to show in 2011 as the city is forced to pay more into their minimum municipal obligation for the pension plans.
"We have so much that we have to put in there and we do get funded by Act 205 money, but it is not enough to cover it. Usually it is. There's only been like three years that we've ever had to take money out of the general fund and put it into the pension fund. It's usually because of the markets and the money that we lost," Muhitch said.
During Thursday evening's budget meeting, council members heard from representatives of more city organizations, including the Redevelopment Authority, Airport Authority, police, and Street Department.
For more on this story, see the Nov. 6 edition of The Daily Press.