A projected $1.3-million budget shortfall has Bettendorf city officials scrambling to offer an early retirement incentive to employees and seeking council support for a property tax increase for the coming fiscal year.
City Administrator Decker Ploehn and Mayor Bob Gallagher called a special work session of the city council Monday (1/29) to outline the proposed early retirement program and the need for higher taxes to offset the incentives over the short term.
The projected shortfall results from a $571,000 decrease in sales tax revenue, $600,000 less than expected in property tax and $170,000 less in gambling tax revenue, Ploehn told aldermen.
The city administration asked the council to meet again Wednesday (1/31) to vote on the early retirement plan so employees could be offered the plan starting Feb. 1. Employees would have a week to opt in to the early retirement plan, but would also have under federal law 45 days to reconsider that decision.
"During our budget work, we talked to you preliminarily that we are short in a number of revenue funds that has taken us a little bit by surprise," Ploehn told the council. "And so we know there's going to be a budget shortfall as a result of that."
The incentive would amount to a one-time lump sum payment of 75 percent of the employee's base annual salary, paid employee insurance through June 30 of this year and a one-time lump sum payment to the employee's health savings plan equal to 24 months of single coverage at a rate of approximately $1,000 per month.
Employees to qualify must be full-time, 60 years old as of Dec. 31, 2018 and have 10 consecutive years of service as of April 27 of this year.
A total of 29 city employees would qualify for the early retirement including five in community development, eight in public works, three in the police department, two in the fire department, four parks employees, two at the library, one in the economic development department and four in the finance department.
To pay for the early incentive program and restore fund balances to the normal 20 percent level, City Finance Director Carol Barnes said the city is looking at not more than a 10 cent per thousand dollar assessed value tax increase, and more likely around a 5-cent increase.
The exact number of employees who take the buy-out will impact how much the city will need to levy, and that should be known by the Feb. 10 budget work session.
