City Employees May See Health Insurance Increase

By DAVID QUESENBERRY

Patriot Publishing

 

Employees of Radford City could be paying for part of an increase in their health insurance premiums for the upcoming budget year.

 

While discussing preparation of the proposed budget, Interim City Manager Craig Meadows told Council, “One of the huge impacts, and it couldn’t have come at a worse time, was the twenty-nine percent increase that the City was facing with its employee health insurance costs. That increase was over a million dollars and we had to scramble and work closely with our consultants to try to identify a plan that still provided strong coverage but has deductibles. Whereas the current plan does not have deductibles. We were able to get the cost down from a twenty-nine percent increase to a fourteen percent increase. But, even at fourteen percent, it’s almost a $638,000 cost to the City.”

Meadows said the proposal was to pass two-thirds of that cost to the employees through increased rates and one-third to the City. That resulted in $425,000 in premium costs that would be paid by the employees.

“What that means for employee health insurance is from either an individual employee or to a family, it’s going to be an increase of about $100 to $300 a month in additional premiums. We are still taking a look at that.”

Meadows said the City would conduct open enrollment in April to begin talking to the employees. Coupled with two years of no increases, the news on the increased health insurance cost he said was a “punch in the stomach.”

He added that the issue would have to be “at the top of the list” for the new manager and his team to figure out a better way to handle health insurance costs for the employees.

The remarks were made during Monday night’s budget work session, where Council reviewed the proposed budget for FY 2026 and discussed with the department heads their concerns about their departments.

Meadows reviewed both the total budget for FY 2026 and the budget for each of the seven funds that make up the City Budget. The total budget for FY 2026 stood at $77,262,257 a reduction from the current year’s approved budget of $79,043,310 which is a reduction of 2.1 percent or $1.6 million. Proposed appropriations for individual funds reviewed for Council were as follows:

General Fund – $33,122,947. Revenues were shown as increasing by $3.385 million due to the proposed real estate tax rate of 79 cents, while expenditures dropped between $1.7 million and $1.9 million. At this time Meadows said, the General Fund budget did not have funds allocated for another revenue anticipation note.

Highway Maintenance Fund – $3,058,290. Funds are received from VDOT for street maintenance. Reserves were estimated at $495,363 but could only be used on street and highway projects such as a capital project or matching funds for street related grants.

Transit Fund – $3,885,815. This budget increased by $851,749 to account for capital replacement of buses in 2026 with funds provided by the Federal Transit Administration and the Virginia Department of Rail and Public Transportation.

Water/Wastewater Fund – $6,594,000. Revenues for this fund included the four dollar increase in water and wastewater rates. A drop in expenditures to $5,922,226 left $671,774 for reserves – of which $200,000 was to be transferred to the General Fund.

Electric Fund – $28,867,505. Expenditures were projected to drop leaving $4.67 million in reserves which included the $4 million for transfer to the General Fund. Meadows said there were no proposed changes to the electric rates in the 2026 budget. He said he expected that Council in the next 30-90 days would have to see where the City stood with wholesale power rate costs and also see if any changes were needed as the summer season arrived.

Solid Waste Fund – $1,734,000. Revenues for this budget included the three dollar per month increase to the solid waste fee and a 5 percent increase in the dumpster collection fee. Expenses also increased slightly due to an increase in tipping fees at the New River Resource Authority.

Internal Services Fund – $1,078,320. This fund is used to track charges between departments primarily for motor vehicle maintenance. This ends up being somewhat of a “wash” since revenues in this fund show up as expenditures in other line items.

In response to Mayor David Horton’s question if there were any other places where the City could find savings, Meadows said given discussion about the General Fund at the last meeting, he had prepared some numbers based on the rates Council advertised to give some idea on revenues. His findings were as follows:

Real Estate Tax: 82 cents-$363,000 over the rate of 79 cents as proposed for the budget.

Meals Tax: 5.5 percent to 6.5 percent-$250,000.

Personal Property Tax: $2.44 to $2.55-$80,000.

Hotel Occupancy Tax: 8 percent to 8.5 percent-$25,000.

Cigarette Tax: 40 cents to 41 cents-$3,000.

If all the advertised rates were adopted, he estimated the total additional revenue realized for the General Fund would be approximately, $721,000.

Meadows also reviewed potential reductions in expenditures for the General Fund. Expenditures for the Regional Jail were reduced by nearly $82,000. Another $46,000 was realized by reducing appropriations to outside agencies. Continuing the “hiring freeze” for six vacant positions including three police officers, one telecommunications officer and two motor equipment operators would result in approximately $500,000 in savings for a total savings of expenditures of $628,000.

The increased revenues and expenditure reductions together could result in approximately $1.3 million being returned to the General Fund in FY 2026.

After discussion of the budget, Council had a wide ranging discussion with Department Heads on their concerns for their departments in light of the City’s finances.

Several issues mentioned during the discussion included:

• Difficulty in retention and recruitment of personnel caused by the increasing competition with other localities for employees and the potential retirements of existing employees.
• The smaller pool of prospective employees with needed skills.
• Effect on provision of services due to personnel vacancies and the need to maintain adequate staff for general or emergency functions.
• The coming need for the City to upgrade its information technology and computer operations capabilities.
• The need to offer activities to attract business and activities to the City.
• Need for a dedicated grant writer for the City to free up employees for their primary departmental duties.
• Infrastructure needs.

 

After the discussions with the Department Heads, Council entered into a closed session for discussion of personnel matters as allowed under state law.

The next scheduled meeting of the Radford City Council will be at 6:00 p.m., Monday, April 14, 2025 in the Council Chambers of Radford City Hall. Council is scheduled to conduct a public hearing on the FY 2026 budget along with a first reading of the budget and proposed fee/rate increases.